Why Trading Price Action Is So Important
June 23, 2009 by John Templeton
Filed under Forex Trading
There are tons of people who do not have the first thing how to properly trade the forex market. New and struggling traders represent a major part of what is happening right now. It’s really tough to get started nowadays when you consider how much information is always available on the internet, because you are not sure what to take seriously and what you should brush away. I know because I went through the same thing.
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?
I’m going to have to give you some startling news. Trading with generic indicators like stochastics or moving averages, and using them as your only reason to take a trade, you will not see a whole lot of success trading the forex market. Understanding price action is so critical if you want to make money long term. After all, its the basis of technical analysis.
This is just some of the many reasons to trade price action:
Real support and resistance areas: That’s right, REAL. I don’t mean to use all these generic indicators that will put these s/r on a chart. That’s not the real deal. For the real stuff, you have to see it with your own eyes.
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.
You can predict key swing points: This is so vital. You get to know when and where a price will make a key turning point. You can also trade it on all multiple kinds of time frames. It doesn’t make any difference if you are a short term or long term trader. Price action is perfect for everybody.
You can trade on any kind of market. The amazing this is that price action is universal. It could be forex, stocks, derivatives, etc.
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