Price action analysis is one of the most effective yet simple techniques to achieve consistent success in the forex market. Simplicity is key in trading any market because a simple method helps you regulate your emotions more effectively than a complicated indicator based trading system.
Any one who has actively traded forex, stocks, or commodities for any period of time knows that emotion management is paramount to consistent profits. Price action analysis allows you to have a window into market direction based on price movement, price data is the most significant data no matter what market being traded. It is the visual representation of all relevant information you need to know for your price action trading plan.
Trading the forex market off of price action is a great journey to embark on. The simplicity yet relevance and profit potential enabled through price action setups cannot be overstated. Once you learn to spot specific price action setups you will be on target to consistently profit in the forex market. It is entirely possible to perfect one specific price action setup and profit consistently off of that one setup.
Where many aspiring traders go wrong is in believing they need numerous setups or indicators to make money; they often fall into the trap of assuming more is better in forex trading, when in fact more is usually worse when it comes to trading. The less confusing and jumbled up your forex charts are the more clearly you will be able to see what price movement is naturally trying to show you.
Many traders overlook the benefits of price action analysis because they think it is too easy to learn or that trading should be technically difficult. The fact is that profiting consistently in the forex currency market is not technically difficult at all, it is actually technically easy. It is relatively easy to learn price action setups that work with a high degree of probability.
What is not easy in forex trading is managing one’s emotions and managing one’s money as well as maintaining a disciplined mindset. This is one of the main benefits of price action analysis; it helps you manage your emotions and stay disciplined by giving you a straightforward yet highly effective and relevant trading method to base your forex trading plan from.
Most traders start their trading plan on a shaky foundation that uses a confusing method that they themselves barely understand. Why use lagging indicators that are derived from mathematical formulas that you don’t understand which ultimately just show you previous price action that you could have seen in a much more relevant form using price action analysis?
The bottom line is that forex trading is an intensely psychological profession, and until you realize that every aspect of your trading plan needs to take into account the psychological aspect of market activity you are likely to be unsuccessful. A solid trading method is usually the first thing traders try to acquire when starting out.
Generally, they pay way too much for junk systems that just cover up the relevant price action that you can spot on any naked price chart. Don’t fall prey to the scam of complicated indicator based systems or forex signal services. Educate yourself in price action analysis and teach yourself how to fish in the forex market, then you can eat for free for a lifetime.