Forex trading – don’t use indicators

Every indicator I have ever come across has been a lagging indicator, this because all indicators must be lagging price by their vary nature. You see, indicators give you a visual representation of price, just not in the form of price action, if it sounds silly it’s because it is. It is impossible to visually show something about price that has not happened yet. Yet, many traders still insist on putting numerous over-lapping lagging indicators on their price charts. It’s a little bit like trying to read a book in a dark smoky room. Why would you do such a thing when you could read the very same book in a well lit un-smoke filled room? Traders that add indicators to their charts are essentially making something that is already difficult to analyze about twenty times more confusing.

All indicators are derived from price, any repetitive pattern that traders can find on an indicator they can find on a naked price chart, and much more clearly. Traders trick themselves into thinking if they have more indicators than the next guy and know how every parameter of them work than they are giving themselves some sort of an edge. In the end, all this usually amounts to is analysis paralysis and ever shrinking trading accounts.

We as traders have a difficult enough task with money-management and the psychology of trading. These two most important tasks can become exponentially more difficult if we over-complicate our analysis of the market by piling on a bunch of lagging indicators onto our charts. We need to go straight to the horse’s mouth, so to speak, by only concentrating on and studying price action. Price action analysis will tell you everything any lagging indicator will tell you, and much sooner. The reason consistent trading profits elude so many traders is because they do not manage their risk correctly and or they have no system and little or no discipline.

Many traders perceive a lack of self-discipline and or a lack of a real trading plan as a lack of market knowledge, be it technical or fundamental. Their next logical step is to study more about technical or fundamental analysis, add indicators to their charts, and over analyze everything. I am here to tell you that the problem is in your head, and by cluttering up your charts with useless lagging indicators you are only compounding an already difficult problem. All you’re method needs to be concerned with is price. Price action analysis will show you that you do not need indicators; you just need a simple to understand method that frees you of the frustration of over analyzing and allows you to concentrate more on self-discipline and building a common sense trading plan around the heart of the market, price action.

http://www.learntotradethemarket.com/