When beginners get into forex trading, they find it difficult to accept the most crucial concept; that the process of technical analysis doesn’t have to be confusing or messy. People who are new to trading start off with multiple indicators on their charts, open too many websites on their computers to try and analyze hundreds of different variables all at the same time.
New traders do this to find a trading edge. This is why traders use indicators to find clues of what could happen next in the market. What most traders fail to see is that the trading edge is often right in front of them, cleverly hidden amongst the many distractions on their charts – price action analysis.
Trading systems are not based on indicators or software will not instantly turn your computer into a money-making machine. What you should capitalize of learning how to effectively analyze your price chart. To do this, all you need is a computer, your eyes, and the raw price action data supplied for free by the market. Reasons you should analyze the markets include:
You will make clean trades
One of the main reasons you should learn how to read price actions is because it declutters your charts allowing you to trade in a simple manner without messy and confusing indicators. The trading world offers a lot of confusing advice, approaches, and methods so removing all that from your charts will help you stay ahead of other traders.
While indicators can come in handy at an advanced trading level, as a beginner you should focus more on learning how to clearly map the charts. You need to listen to the market and learn how to interpret the price action before making a trade.
This will put you at a better position when using technical analysis to simplify your trades. Without taking the time to do this, you over-complicate your analysis. With time, you will be able to formulate an anticipatory trading plan that will effectively help you plan your next move.
You will ignore all the news
By learning to effectively read price action, no news will be good news. You will be able to ignore news and other unnecessary trading variables. The price action alone is a reflection of all the news and other variables influencing the trade.
With less variables to analyze, you will effectively avoid analysis paralysis that hurts traders. You will have no time to use up most of your time trying to make sense of variables. Trading with price action means that you only need to worry about the trend, price action signals and the levels.
In most cases, the actual trade move happens before the trading news is removed. The approach used is to make the trader buy the rumor to sell the fact which only puts traders at losing odds. Pay attention to the price action and you will automatically be tipped off about the next market move.
You will identify repeating patterns and clear trading signals
Once you can read the raw price action on your charts, you will have a safe trading strategy that provides you with a defined set of entry and effective risk management rules while providing you with a high-profit edge.
Price action signals and patterns repeat themselves across time. Once you learn how to identify price action signals in real time, you will develop a trader’s intuition and start trusting yourself in reading signals and patterns.
You will start taking a minimalist approach when trading
The rule of minimalism is always having less because then you have less to worry about. The less you have to worry about your trades, the less problems and the less you to think about. Most people buy things they don’t need only to realize that they didn’t even need it.
The basic idea of minimalistic trading is that by doing less, you will be thinking less, analyzing less, and as a result trading less. This is one of the most important catalyst for your trading success.
Hence, we recommend minimizing your interactions with the forex market, from how often you enter to how often you check, and to how many times you open the charts. One of the best ways to make money faster, is to have a minimalistic approach.
While indicators can come in quite handy, learning how to read the price action bar by bar can also be the easiest and fastest way to thrive in the market.