Trade Forex With Price – What A Novel Idea
With all the trading short-cuts that are now in the forex marketplace, people seem to forget about the first ever form of technical anaylsis, which is Price. I suppose traders are more interested in the shortcut.
You can tell this is true by just going to any forex forum. What do you normally see people talking about? Usually its about some magical system filled with a bunch of indicators or a Forex Expert Advisor that basically uses those same lagging indicators to come up with an automated forex trading system.
Do you see what’s wrong with this picture?
Well for starters, they need to realize that all the indicators like stochastics, MACD, RSI, etc…. are lagging. They are great for telling you what has already happened. It provides no ability to forecast future prices.
Another important thing for traders to realize is that approximately 95% of all trades end up losing money. Since this is true why on earth would you want to be doing the same exact methods that 95% od the trading world is doing?
Think about this from a logical perspective. Chances are traders that are on a forum are struggling with their trading. If that wasn’t the case why would they even be there? Most truly successful forex traders don’t have the time nor the inclination to hang out in a forex forum.
What’s really increased in popularity are the Forex Expert Advisors. For those that don’t know, these are basically automated trading machines or robots. Developers program them using lagging indicators so the market trades automatically while you’re away.
You can see why this would be right up the alley of a new trader. After all who wouldn’t want the ability to come and go as you please. You can go anywhere you want and in the meantime this robot is going to make you rich, right? Actually that’s not the way it works.
Remember with expert advisors, you’re asking something from a computer that 95% of all the traders in the world can’t accomplish. Being that the forex markets are so new driven, do you really think that a computer is going to be able to quantify any kind of breaking economic news that comes out?
For those that want to have a deeper understanding of the market then, I recommend you get rid of all your indicators and start trading the markets on a clean chart. Just follow the price action. See if you can start to notice patterns that are always happening. These are the kind of patterns you need to focus on, because this is how you forecast future prices.
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