Learning to Trade Forex Using Price Action
If you’re curious about getting a deeper understanding of how to trade the forex markets, you’re going to have forget about all those lagging indicators that you’re using.
Indicators such as MACD may look great on the charts, but you’d be hard pressed to find anybody who can use it to get a deeper understanding of the markets.
I’m positive we all know how to use an MACD indicator, but what does it mean to the overall price movement and direction of the market? Most don’t really know.
If you’re using indicators like these, they may seem like a faster way to understand the markets, but that’s just not true. What the indicator is really doing, is just being your translator. It may seem like a great idea, but all it is doing is interpreting the market from its own parameters so you see it only through it’s eyes, not your own.
There is no need for a translator. You have to fill those shoes. Let’s say you were moving to a Spanish speaking country for a year. Wouldn’t you take the time to learn Spanish before you got there? (After all, you’re spending an entire year there). I’m sure you can find some body who speaks English there, but do you really think you’re going to enjoy the local culture if you never bother to learn the language? Of course not, and it’s no different in forex. The only difference is that the language that is needed to be learned is price action.
The first thing you need to do to learn this new language is get rid of all your indicators that you use to trade with. Don’t leave a single one. You’re only cheating yourself. Then, pick a currency and just watch it for the day.
I know this may not seem like you’re going to learn anything, but you are. You are going to be able to see that price patterns get repeated and pretty soon you?ll be able to forecast future price movements.
If you don’t really think its possible to do this, then research the name Jesse Livermore. Livermore became rich in the early 20th century by just trading on the market floor. All he used was the price action from the other traders on the floor to base his trading decisions off of.
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