Forex trading in price promotions can be defined as decision-making based on chart price patterns, creating patterns through simultaneous traders' responses to news and world events. Trading in price promotions is then a study of human emotion displayed in the Forex price charts and presented to the trader in the form of price patterns, which are repeated over and over again in all time frames and all currency pairs.
Before I discuss in detail why trading with price is the way you should trade Forex, I want to discuss technical indicators. The Forex trader must understand that technical indicators are derived from the price itself and as such fall behind the price action. This means that if you are a technical trader using only indicator-based strategies, you will unfortunately more than likely fail in your attempt to trade the markets for profit. In particular, you will come on the market too late and close your transactions late when you trade with indicators.
When you derive a technical indicator from the price, you usually smooth out some of the lows and peaks of the price itself, but more importantly: you build inherent delays in the indicator compared to the price, this is vital to understand and is related to the point I made above – technical indicators are lagging behind and this costs you money.
If you look at internet search engines, you will find an abundance of indicator-based systems for sale or rent, along with volumes of articles, trade robots and other certain brand systems that inform you about how you can make money with an indicator-based system. This is all well and good, do these methods and systems really make money?
If we accept that more than 90% of traders end up losing money trading or wiping their accounts, trading in forex and if we accept that the vast majority of these people use indicator-based methods to trade the market, I think that's something based systems themselves tell about the indicator.
Indicator systems in the best case will help you to break into the markets, while price action methods will help you to become pretty profitable.
The price study is then the observation of trader activity in the market, this can be seen and depicted in the market through the price action pattern. The patterns express the emotions of the trader.
In my next article I will elaborate on the price and start with the discussion and explanation of the different types of trading methods for price promotions that I view daily. Methods that work well in the Forex markets and that are easy to see in the charts during live trading.