Why Price Action Should be Used

June 21, 2009 | Filed Under Investing

by John Templeton

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 afraid I’ve got some very bad news for you. If you are trading with all these generic indicators that everybody seems to use, you will not see much success, especially if that is the sole reason to take a trade. If I were you, I would start to learn more about price action. This is the basis of what all technical analysis was formed from.

These are some of the advantages of price action:

With price action, you actually get to see support and resistance areas. When I say this, I don’t mean those generic indicators that supposedly put those s/r areas on these indicators. These areas cannot and will not be ever calculated by indicators.

You actually comprehend why the market moves the way that it does. When you use indicators, do you really have any idea of the underlying reasons why the market moves the way that it does.

You are able to predict vital turning points in the price. I can’t begin to tell you how important this is. What’s also great is that you can trade all kinds of time frames. You are not limited to being a short term or long term trader. It goes to show that price action is for everybody.

It also doesn’t matter what kind of market you trade. You can trade stocks, forex, futures, derivatives, etc…. That’s how universal it is.

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