Traders often wonder what is the best forex trading strategy? There are certainly a lot of choices, but if you read up on the history of some of the most successful traders (of any market), you'll find that the term price action comes up a lot.
Price action has been used ever since the first stock was traded in the stock market. Read the history of the famous floor trader Jessee Livermore, who basically used the price movement of a stock to tell him when to buy and sell. He became a multi millionaire just by understanding the concept of price action. What's more amazing is that he didn't even use a chart, let alone all the bells and whistles that us traders use today.
Even though the basic principle of price action, it that you do not use trading indicators, it's obviously not as cut and dry as other trading strategies. After all, two traders can be using price action in very different ways.
Some traders like to use it to spot support and resistance areas, while others like to use it to predict where the future price is headed, others like to use it for spotting the trend, or spotting when there is a countertrend. That is kind of the beauty of it. It isn't some generic, mechanical trading system, where you throw a bunch of indicators up on a chart, and say when "x" and "y" do this, I will do "z". It requires you to use a little subjectiveness and thinking outside the box.
John Templeton has been a successful forex trader after learning how to trade price action. Once he understood that all he needed to trade forex was on a plain chart with no indicators, his profits soared.
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