What to know about trading forex using price action

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If you want to get a true understand of the forex markets, you’re not going to be able to accomplish that with the use of forex lagging indicators.

For example, an MACD indicator may be nice to look at, but can anybody who uses it actually say with great certainty that they have stronger intellectual grasp of the market.

I’m positive we all know how to use an MACD indicator, but what does it mean to the overall price movement and direction of the market? Most don’t really know.

While using indicators such as these may seem like a great shortcut for learning the forex market, the real truth is you’re just using it as a translator of the market. The indicator translates what it sees to you and shows what it sees through different colors and lines. This may seem like a great idea, but it’s really not.

YOU should be the translator. The market shouldn’t have to be translated for you. It’s like going to live in a foreign country for a year. You could probably always find somebody who spoke English, but to really be able to live and enjoy the culture, you are going to have to learn to speak the language. It’s the same case with trading forex. Except the language you have to learn 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 some of you probably think, that doing some like this will not lead to anything great. Well, if you have that attitude, then it probably won’t. However, if you have an open mind you’ll start to see that price pattern repeat constantly and that can be used to trade the markets.

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.