Forex Trading Uncut
When it comes to forex trading, beginner traders nearly always make things way more complicated than they need be. They probably start off with simple trading techniques but within no time they have covered their charts in lagging indicators and rubbish that only makes trading harder. They may also start to take in huge amounts of news and market information that is simply not necessary. In the end they become so exhausted and frustrated, and lose so much money that they give up.
But it doesn’t need to be like this, trading can be as easy as you thought it was before you started. Simple forex techniques are the best, they are the most flexible in all market conditions. The problem is that simple forex techniques sometimes take a while to master. But most traders are in a hurry, they are impatient and hungry for big wins. There are very few traders in the world who master trading in a week or too, in fact I would say there are probably none. Most have had to do the hard yards, and have spend endless hours developing a strategy and their own mindset to get to a place where then can profit consistently from the forex market.
Price action
Most peoples charts look like some form of abstract art, and they end up completely obscuring the key element of the forex chart: PRICE. Price is the single most important piece of information that the trader needs to concern themselves with, not indicators and not market rumours. Price holds the key information about the market, it tells us about the sentiment of the traders behind the chart by the way that it moves. It shows us this by displaying patterns in price that repeat themselves over and over. Price action trading is trading based on the patterns that develop in the markets.
The patterns themselves form due to the repetitive nature of human beings. Humans tend to do the same thing every time a certain event happens. For example, when price comes down to very strong support traders will see this as an opportunity to buy. They buy because they have been taught and have learned that buying at support is a good thing, and he very fact that they buy, makes it work. It is a self fulfilling prophecy.
Price action will show us when traders are buying on support by the way it acts on this level. A common pattern to see at support is a pin bar, a pin bar is a candle with a long tail that shows a rejection of a certain direction, in this case a pin bar bouncing on support will show rejection of lower prices. From this we can deduce that traders have strong conviction about buying the market at this support, and there is a good chance the prices will move higher in the coming days and weeks.
Pin bars work best on the daily charts and the 4 hour, smaller timeframes are less reliable as the signals are often created by market ‘noise’.
By learning price action you can do away with heavy charts laden with indicators, price action with support and resistance can be very profitable once you learn to apply it properly. The alternative to this is to continue with a hugely complicated trading system, that is neither enjoyable or extremely profitable.
Remember that the forex market only moves up and down. It can’t do any thing else. Most people go way over board with their system to try and catch these moves. Simple trading techniques are just as, and even more effective at catching market moves.
I encourage you to at least look a price action trading, and if you don’t use solely price action, then a little understanding is better than none.
Safe trading.
Hello, my name is John, I am a price action forex trader and I have been profitable since I started learning price action. To learn for free look at http://www.forex-trading-uncut.com/.
Forex Trading Outlook 10-1-11
