Simple Forex Trading Method

There are many different trading techniques available on the internet that you can use to trade the forex market with. Whether or not they are actually effective at making you money on a long-term basis is another story all together. The problem with most forex trading techniques is that they are too complicated or they rely on a system of rules designed to mechanically trade the market with. The issue here is that strict rule-based trading systems fail to take into account that the forex market is driven off of human beliefs and emotions which can vary widely from one minute to the next. So, the paradox within learning to trade the forex market lies in the fact that to effectively profit from human driven price movements, which can arise from a multitude of complicated reasoning patterns, one must learn to trade with a simple forex trading method.

It is almost an inherent characteristic of forex traders to assume that the more complicated their trading method is the better their returns will be. The fault in this logic lies in the fact that a “naked” price chart is as close to a clear aggregate picture of market participants’ belief structure regarding the impending price direction of a currency pair as you will ever get. Any trading technique that adds any sort of indicators or programming language onto naked price movement is simply going to make an already difficult task, significantly harder. For this reason a simple forex trading method will always win out in the long-run over a complicated messy indicator-based trading system.

Another important aspect of learning to trade strictly off of pure price action on a naked price chart is that by doing so you are employing a method instead of a system. Many people get the two confused and seem to think they are the same thing. In fact, a “method” of trading the market is a way of not only entering and exiting trades, but of making logical sense out of the daily price dynamics, in essence a simple forex trading method provides you with a useful perspective on the market that is adaptable to changing market conditions. A “system” is a rigid set of entry and exit protocols that really teaches you nothing of price dynamics or how to read a price chart, it is essentially a way for people to try to make trading as effort-free as possible, when in reality all it does is make it harder and more confusing

Price action analysis is the art and skill of learning to interpret the reflection of human emotions that is captured each day on a naked price chart. A simple forex trading method like price action analysis allows you to “read” a price chart, rather than trying to interpret a group of indicators that are derived from price anyways. The old saying, “straight from the horse’s mouth”, is applicable in this regard, why would anyone try to interpret a combination of lagging indicators or a software trading program when they can much more easily and accurately learn to interpret and trade based off the derivative of all these indicators, which is of course price action. The short answer is because they are led to believe that these indicators will make them profitable traders by people who are not actually traders themselves. Any profitable and professional trader knows that simple forex trading methods are the quickest route to becoming a consistent forex trader.