Trading Forex Using Price Action

It seems like when any person starts learning how to trade forex, they usually scour the internet for explanations on how to use indicators such as stochastics, MACD, moving rates and others. Then they cover their charts with as many of these lagging indicators that will fit. Trading forex using price action usually is not something that springs to most newbies' minds. A lot of it has to do with the fact that most traders feel that they can not decipher which direction the market is moving without these indicators.

Trading with indicators is a lot like trading somebody else's signs. You're just watching that its right. You're really not sure why the price is moving the way it is. What you're following is just someone else's opinion, (or in the case of an indicator, somebody else's formula). The whole point of trading forex using price action is that it eliminates all the clutter and you can trade from an unbiased point of view.

What happens many times when traders have so many indicators on their charts, is that a couple of the indicators are giving conflicting links (one is saying that its going to go up, the other is saying its going down). Since most traders do not understand price action and movement, they are left waiting on the guidelines for all their indicators to match direction. Its an awkward position to be in when the only reason for taking a trade is because you're waiting for lines to cross each other when you do not really understand what that even signs. The next time you're thinking about that, just think of all the traders on the New York Stock Exchange floor and think about how they are able to trade without charts, much less lagging indicators.

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