One of the most frustrating concepts for beginners is that you don't have to make the process of technical analysis messy or confusing at all.
Frankly, this part of the trading puzzle should be the simplest and easiest, but for many traders, it's the opposite …
They start with dozens of indicators on their graphs, 20 different websites open on their computers, and literally try to analyze hundreds of different variables at once. They do all of this to find a trade advantage. something that gives them an "indication" of what might happen next in the market.
Guess what? This trading edge sits right in front of them, hidden under the mountain of unnecessary distractions on their charts. This advantage is of course the price action analysis.
So don't waste your time thinking that there is a "Holy Grail" trading system that is based on indicators or software and turns your computer into an ATM as (unfortunately) it is not. From over 18 years of live trading experience, I can tell you that the only thing you need to effectively analyze a price chart is your eyes, a computer and the raw price action data the market provides for FREE, oh and maybe a lot of caffeine.
However, if you're still not convinced that price promotions are really the only thing you need to analyze the markets, one of these points can help you make sense:
1. Clean versus messy
As I made clear in my tutorial on price promotions, one of the main reasons for reading price promotions is that you can dissolve and trade your charts in a simple, "nude" manner, without confusing and messy indicators.
The retail world is already filled with a variety of contradictory and confusing advice, methods and approaches. One of the biggest steps you can easily take to stay ahead of other traders is to simply remove all of the "trash" from your charts. Simply put, you don't have to trade indicators at all.
I recommend EVERY trader to first learn to clearly chart and listen to the market by simply learning to interpret and trade the price action. When it comes to technical analysis, simplifying the analysis part is key, but most traders do the opposite. they complicate it.
Take a look at the following sample table and see all the things that we can only see from analyzing a BARE indicator-free price table:
We can use the price action data described above to formulate a forward-looking trading plan that effectively gives us a “window into the future” so we can plan our next move. As you can see at the far right of the graph above, you may have to wait for a retreat to the support zone to look for a buy signal for price promotions.
2. No news is good news
One thing that is very close to my heart and that is also a great benefit of learning to read price promotions is that this way you can ignore the news and all other unnecessary trading variables. As you can see, the price action reflects all the news and all the other variables that affect it.
Variables to analyze less mean that you can avoid the "analysis paralysis" that harms so many traders by causing them to take in too much and "make sense of it". When trading price promotions, we really only need to look at the three main components: trend, levels and price action signals.
As I have written in other lessons where I discussed why I am not trading the news, the actual departure from most news has already occurred when trade news is released. This has to do with the "buy the rumor, sell the fact" effect that occurs in the markets as a trader, and in particular the larger players expect what will happen when the XYZ event is released or takes place. The point is often what appears as a logical price direction as a result of a particular news event is not the direction it is moving, but sometimes it is. So it is really in vain to try to gain an “advantage” by “predicting” a market move based on the news, especially if the price move has probably already alerted you to the next market move before or before the news .
3. Price action is the language of money
Price promotions give us the best insight into the psychology of those who trade in the market. In fact, the price movement that we see on a chart is just human psychology that happens across the markets. What a trader thinks is a good place to buy is what another thinks is a good place to sell, etc. If more people think buying is the right step, the price rises or falls, if more sales says the right one Keep pace. Regardless of the variables involved in these decisions, the end result is the same: price movements that are reflected in a chart via price bars. So cut out, so to speak, the "middle man" (the variables other than the price movement) and learn to read the "language" of money that is right there, staring at you in the charts.
So if the price includes all beliefs and views of all market participants and a specific point in time, we can read what the market participants are saying or trying to say by reading the price bars in the diagrams. Let's look at an example:
In the graphic below, we see with a bullish pin bar that bears initially pushed the price down, but buyers saw this as an opportunity and were more aggressive in this downward move, resulting in a long bottom tail or wick and a bullish pin -Liste led indicates that the price could soon go higher. The bearish pin header shows us the opposite; that the sellers have won and the price now looks "heavier" or more bearish …
4. Price action Allows us to identify clear trading signals and repeating patterns
If you know how to read the raw price action in the charts, you also have a complete trading strategy that gives us a defined set of entry and risk management rules while giving us a high probability advantage.
For example, if you get a clear pin-bar signal at a key chart level and ideally within a trend, the "Big 3" flow factors are in a row for you: trend, level, signal or T.L.S. In this way, you not only receive an entry, but also an "integrated" risk management strategy. You will base your stop loss placement at least in part on the signal bar and surrounding levels, and your position size and profit target will be determined from this.
Check out the table below to get a better idea of how the T.L.S strategy works so easily and effectively:
A simple set of parameters: trend, level and signal can give us some setups with very high probability for repeating price actions:
The self-study of diagrams makes it clear that price action signals and other price action patterns are repeated over and over again. As soon as we learn to identify these signals in real time and to develop the gut feeling and intuition of the dealer and to trust ourselves, these signals and patterns will “pop out” more and more. It will almost be as if the market "talks" to you directly …
5. A minimalist approach is often best
Minimalism is a way of life for some people, and it is something that attracts me a lot and that I try in many ways to model in my own life. Having less means that you have less to worry about, less problems and less thinking about. Most people buy things they don't need and end up realizing they don't even want to. The results are in: "Things" don't make you happy. Time, freedom, spending time with loved ones, not having to worry about money all the time; These things make you happy.
What does that have to do with trade? Everything.
I wrote an article about a minimalist guide to trading that you should definitely read. The basic idea is to do less; Think less, analyze less and ACT LESS is the catalyst for commercial success. You really need to minimize your interactions with the market, from the number of trades you enter, the frequency with which you check them once they're active, to the frequency with which you open your charts. Less is more and you can earn money faster. Trust me.
In my early days learning how to act, I honestly felt lost, maybe some of you are feeling the same way now. There is just so much information and a lot of what I would call "misinformation" that a beginner must really be able to filter the "good from the bad" to know what it is worth spending his time for and what is not for.
After studying almost all of the indicators and trading systems under the sun and finding that they were not working as advertised, I finally returned to simple trading in price promotions. It quickly became clear to me that this made the most sense and that I didn't need all the other "crap" in my charts that only hindered the REAL view of the market. the price action.
I have been dealing with price promotions for well over 15 years and it has proven itself time and again. It is simple but very effective and makes it unnecessary to look at other variables as everything is really reflected in the price movement. You just need to know how to read it.
The trading tutorials I've been creating for my students since 2008 are exactly the kind of real educational resources that I would like to have access to when I started my trading trip all these years ago. If you apply yourself and stick to the core philosophy of reading price promotions bar for bar and keeping your general trading methodology simple, your chances of being successful in the world of professional trading will increase significantly.
This blog and the hundreds of trading lessons I've written, as well as my professional price action trading course, are designed to help you dramatically speed up your knowledge and get you trading faster.
Cheers to your future trading success, Nial.
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