Forex price movements can be defined as trading decision-making based on chart price patterns, and patterns generated by traders simultaneous feedback, on global news and events. Trading price action, then, is a study of the human emotions described in Forex price charts and presented to the trader in the form of price patterns, which are repeated over and over across all time frames and all currency pairs.
Before I discuss in detail why trading with price is the way you should trade in Forex, I would like to discuss technical indicators. The forex trader should understand that the technical indicators are derived from the same price and thus lag behind the price action. This means that if you are a technical trader using strategies based on an exclusive basis, it is unfortunate that you will most likely fail in your endeavors to trade the markets for profit. In particular, you will enter the market too late and close your trades too late when trading with indicators.
When you derive a technical indicator from the price, you usually mitigate some of the peaks and peaks themselves, but more importantly, you build inherent delays in the index when compared to the price, which is very important to understand the point you made. Above – technical indicators lag behind and this will cost you money.
If you look at online search engines, you'll find a large number of index-based systems, for sale or rent, along with volumes of articles, commercial robots and other proven firefighting systems to tell you how to make money using an index-based system. All this is good and good, however, do these methods and systems really make money?
If we accept that more than 90% of traders end up losing money trading or wiping their accounts clean trading forex trading and if we accept that the vast majority of these people use index-based methods to trade the market, I think this tells us something about the indicator systems themselves.
Indicator systems will help you at best to collapse in the markets, while price action techniques will help you make a good profit.
A price study is therefore to monitor the activity of traders in the market, and this can be seen and depicted in the market through the pattern of price action. The patterns express traders' sentiments.
In my next article, I will discuss a bit about prices and start discussing and explaining the different types of price trading methodology that I see daily. The methods that work well in the Forex markets can be easily seen on charts during live trading.