Description of Price Action
You know we live in a time where only 5% of the trading public is making money in the forex market. Why do you think that is?
Do you think it’s because the successful traders are smarter or have a better education than the unsuccessful? That couldn’t be farther from the truth. There are plenty of successful traders who never even graduated from High School. Intelligence, or lack there of, has nothing to do with it.
Do you think it’s because the successful traders can afford all the expensive trading software to trade with? Really???…….I think you remember my point about people wasting their money on needless charting platforms.
Do you think it could be because the successful traders know the “holy grail”? Well…..I hate to be a myth buster, but there is no such thing as the holy grail. At least, not in the way that you think it does. There is no magical formula that will unlock the million dollar secret to trading.
Give up? It’s simple: Interpretation.
The successful forex traders understand that the market is not mechanical, and shouldn’t be handled as such. They understand that in order to be successful you have to analyze and interpret the market.
Somewhere along the way, words like analyze, interpret, and subjective became dirty words in trading.
Traders didn’t want to have to think. They just wanted to be told what to do. But that’s not what trading is!
Any Idiot Can Create A Forex Trading System
Don’t believe me?? Just go to one of the many popular forex forums that are on the internet.
You’ll see literally thousands of forum threads with traders creating their own forex trading systems. Other members of the forum go to the thread and then start trading that particular system.
What usually happens? It doesn’t work out too well. Why do you think that is?
Well……for starters, it probably is an indicator based trading system. In other words, it’s a system that could be using moving average crossovers, just for example.
Doesn’t really leave much room for interpretation if all you are doing is buying and selling when a couple of moving average lines cross one another.
The other problem is the fact that you are ALWAYS supposed to be trading when the lines cross one another. Let me tell you something. There is no such thing as ALWAYS in trading.
Lastly, you are not separating yourself from the other traders.
Let me put it to you this way:
If there was a mechanical forex trading system in which you can make incredible returns, get a high winning percentage of trades, low drawdown, and be able to do this without having to analyze the market, then why in the world is only 5% of the trading public making money???
Don’t you think if mechanical trading was really that simple, there would be more people making money?? After all, we would all just be trading the same mechanical system everybody else is. We would all have the same entries, exits, etc….. because the parameters would all be the same.
Price Action Is The Greatest Equalizer
It is what really separates the boys from men, when it comes to technical analysis. Heck……. IT IS technical analysis.
When you don’t use indicators, you actually understand why you are taking a trade. You are not taking a trade because Stochastics are oversold or overbought. YOU are the one the making the decision, and best of all YOU understand it, and YOU are able to explain it.
There is no getting around it. If you want to trade the markets, you are going to have to understand what you are looking at. Make no mistake about it. Chart-reading is a skill. It’s not some “holy grail” forex trading robot you can turn off and on.
From the first ever day that the stock market opened, there were floor traders who were analyzing the price movement of a stock as it was going up and down.
People like Jesse Livermore became rich at the beginning of the 20th century just being able to follow the price movement by LISTENING to the direction it was moving in.
He was able to spot natural support and resistance areas in the price just by paying attention. This is somebody who didn’t have the technological advancements that we have today. What’s our excuse???
We shouldn’t have any excuses. None whatsoever. Traders have just become too dependent on technology. Instead of taking the time to learn how to properly analyze the markets, we have traders that want all these gadgets, bells, and whistles to do the analyzing for them.
What Does Price Action Tell Me?
Well, in short……..everything (at least from the technical analysis side).
You know how people read a book? Or how you are reading this right now? Well…..that’s kind of how this works.
You can start from the left of the chart and start reading to the right, just as you would read a book.
- You can start to see support and resistance areas
- You can see where the market would have some breakout areas
- You can read the possible future direction of the price
- You can see how time is a factor in where the price will be going
- You can basically see exactly what is happening in the market
Yes…..I know that there are indicators that will tell you where support and resistance lines are. Yes….I know there are indicators that will tell you where breakout levels are. Yes…… I know there are indicators that predict where the price is headed.
My suggestion is to test these indicators out for yourself. I am sure you’ll be completely underwhelmed with how unintuitive most of them are.
Once again, if it was that simple to make money by slapping on a couple of these “magical” indicators, then nobody would be struggling to make money.
You have to see it with your own eyes. You should be able to spot a support and resistance area just by simply looking at a chart. There are no formulas involved. It’s all about comprehending what you are seeing.
My goal is to get you to see the market through your own eyes. Not filtered through a Stochastics, MACD, RSI, or any other lagging indicator, that supposedly has insight into the market.
What will you learn in Price Action?
- How To Quickly Spot A Trend
- The Correct Way To Use Trendlines
- My Trading In The Buff Strategy (Currently being sold separately for $77)
- The Importance of “Wicks” In Trading
- A Really Simple Way To Spot TRUE Support And Resistance
- When And How To Use Fibonacci Retracements
- How To Trade The Market From The “Top-Down”
- How You Can Literally Read A Chart From Left To Right
More courses from the same author: John Templeton