Why Trading Price Action Is So Important
If you find yourself having a really difficult time grasping the intricacies of the forex market, then you are definitely not alone. There are tons of new and struggling traders out there. I know that if you surf around the internet enough, you will find hundreds of thousands of articles on forex trading. Its enough to give you a headache. I can certainly empathize because I remember going through the same thing when I first started.
You never really get the information you need though, do you? All you ever seem to get is a guy will tell you to put a bunch of indicators on your charts, and as long as you follow them, you will be rich, right?
Well, let me be the first one to tell you that using these generic indicators like stochastics or moving averages as your only basis for buying and selling a currency pair, you will not last long in this business. If you want to take the forex market serious, it is critical that you understand price action. Once you understand that, you understand how the market works. Because the basis of technical analysis is comprehending price action patterns.
These are some of the advantages of price action:
You get to actually see the real support and resistance areas. I'm also not talking about those s/r areas that you get with one of those indicators. The real support and resistance on a price chart cannot be calculated by an indicator.
You can actually understand what the market is doing. You get to see the market's energy and you get to see the underlying reason as to why the market moves the up and down the way it does.
With price action, you are able to predict possible important turning points. This is so critical to a trader. Also, you can use any kind of time frame you wish to use. So, theoretically, it doesn't matter if you are either a long term trader or short term trader. This is proof that price action is for every kind of trader.
It also doesn't matter what kind of market you trade. You can trade stocks, forex, futures, derivatives, etc.... That's how universal it is. - 23218
You never really get the information you need though, do you? All you ever seem to get is a guy will tell you to put a bunch of indicators on your charts, and as long as you follow them, you will be rich, right?
Well, let me be the first one to tell you that using these generic indicators like stochastics or moving averages as your only basis for buying and selling a currency pair, you will not last long in this business. If you want to take the forex market serious, it is critical that you understand price action. Once you understand that, you understand how the market works. Because the basis of technical analysis is comprehending price action patterns.
These are some of the advantages of price action:
You get to actually see the real support and resistance areas. I'm also not talking about those s/r areas that you get with one of those indicators. The real support and resistance on a price chart cannot be calculated by an indicator.
You can actually understand what the market is doing. You get to see the market's energy and you get to see the underlying reason as to why the market moves the up and down the way it does.
With price action, you are able to predict possible important turning points. This is so critical to a trader. Also, you can use any kind of time frame you wish to use. So, theoretically, it doesn't matter if you are either a long term trader or short term trader. This is proof that price action is for every kind of trader.
It also doesn't matter what kind of market you trade. You can trade stocks, forex, futures, derivatives, etc.... That's how universal it is. - 23218
About the Author:
If you want to learn forex price action, then you definitely check out winning in the forex market.
posted by X - Men @ 2:06 AM
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