The ability to trade forex using price action

Posted on July 30, 2008
Filed Under Forex |

If you are really interested in learning about how to trade the forex markets, you’re going to have a hard time doing so, by using all of those forex lagging indicators.

If anybody uses an MACD indicator on their chart, can they really claim to have a stronger understanding of the markets, by doing so?

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.

You’re the one that has to be the translator, though. The market shouldn’t be interpreted by some indicator. For example, if you moved to a foreign country for a year, aren’t you going to at least try to learn the language. Sure, you can probably find people to translate for you, but do you really think you’re going to enjoy living there if you do that? Well, it’s the same exact principle in forex, except the language 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 some of you probably think, that doing some like this will not lead to anything great. Well, if you have that attitude, then it probably won’t. However, if you have an open mind you’ll start to see that price pattern repeat constantly and that can be used to trade the markets.

If you don’t believe this is possible, just Google Jesse Livermore. He is a famous stock trader from the early 1900s who was able to become rich just by trading the price action on the market floor. If he could trade price action without even using a chart, you have no excuse.

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