March 20, 2011

The Real Way to Trade Price Action and Technical Analysis in Forex

It's a bold title... but it's way overdue in an online Forex trading community that's over-run by scammers and egos who can't tell the difference between a higher high on a 5-minute chart and a higher high from a narcotic.

We've looked into deriving an idea from a very effective short-term day trading method and applying it to a longer term view of price action in the markets. The truth is price action isn't very different no matter what time frame you trade, it just moves faster, trendier (at specific hours of the day), and shorter distances when you day trade.

For swing and position traders, all this means is that you'll need the patience and discipline to hold on to a trade and give it time to work out the way it was planned.

Let's say you trade the hourly chart as your core method. Start by looking at the weekly and daily charts for areas where price is likely to stall (support and resistance.) We're all aware this process isn't as simple for a beginner as we make it sound, but just pay attention to areas where price clearly stops and consolidates, especially on the weekly chart.

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