What is price action Forex trading?
Many people ask me what is price action Forex trading. Price action Forex trading is a trading style that uses no indicators to determine movements in the Forex markets. One of the plus points of trading with price action is the fact that you have a plain uncluttered chart that is free from confusing indicators.
Many traders that use indicators can get bogged down with too much clutter on the charts which inhibits the view of the real thing that you need to focus on, and that is price. The majority of price action Forex traders, trade a clean chart, with maybe one or 2 moving averages on, and a few support and resistance lines. This is the way most professional Forex traders trade the markets, so it makes sense to do the same.
When you have an understanding of price action Forex trading you can predict with high probability what is going to happen next to price. This gives you an edge over Forex traders that use indicators, as generally by the time the indicator has given them a signal to enter a trade, the trade is already over.
Many traders look for confluence to give them a trading signal. Confluence (in case you have not heard of it before) is when multiple factors come together to give a signal to trade. For example if the price is coming up on a support or resistance line, and you also have a trend line that meets at the price point, that is an area of confluence. Now a lot of traders make the mistake of loading the chart with indicators in the belief that the more indicators you have, the more confluence you will have. This can work some of the time, but its not a reliable way to trade. I explain all about why this type of trading does not work in my Forex training course.
You can see from the above chart the confusion caused by loading your chart with indicators. You don’t need indicators on your chart to be able to trade correctly. The only thing you need to look at is price. So now when someone asks you what is price action Forex trading you can now tell them. Its what you need to learn in order to be a successful Forex trader.