What to know about trading 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 imagine many people know the rules of how to trade the MACD, but how many can actually proclaim they know what it has to the underlying reason for the price movement? No too many.

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.

If you want to learn this language, the first thing you need to do is go to the charting system you use and get rid of every single indicator you have on them. Then pick your favorite currency and watch all the price movement 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.