If you are going to plan on trading the forex market using technical analysis, then I think it’s imperative that price action be part of your method of operation. It’s the oldest strategy in technical trading.  If you don’t believe me, all you have to do is take a little history lesson.  Floor traders in the stock market like Jesse Livermore became rich understanding price action. 

This isn’t to say that price action is used by everybody in the same way.  That would be ridiculous.  The concept of price action is way too broad for everybody to trade it the same way.  But the underlying concept is that you use inherent patterns in the market to be able to predict future price direction.

Sadly, there are way too many present-day traders who want all the work to be done for them.  They would prefer to put half a dozen indicators on their trading platform, and just wait for them to tell when you to enter and exit a trade.

When I first begun trading, I was as guilty of this as much as any other newbie.  If you can think of an indicator, I am almost positive that I must have used it at one time or another.  I was thinking WAY TOO mechanically. I wanted the indicators to do all the work for me, and that’s not going to get it done.

If you are the kind of trader who has had success trading solely with indicators than I am seriously envious of you, and you should keep doing what you are doing.  For the other 99%, I suggest that you give price action a try.

By: John Templeton

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