It’s time to settle debate once and for all. Trade Forex with Price Action or Indicators?
Actually, should there even be a debate?
Epidose 37’s question is from Peter
“What are your thoughts on trading and watching the market with no indicators?”
Peter from New York City
First Things First
We need to define “Price Action Trading” so we’re all on the same page here.
Googling that very phrase turned up this article in Investopedia first, and in the first paragraph, it states:
In simple terms, price action is a trading technique that allows a trader to read the market and make subjective trading decisions based on the recent and actual price movements, rather than relying solely on technical indicators.
So trading the market without using technical indicators.
Clicking the link in that very quote where it says “technical indicators” takes you here.
They put indicators into two categories — “Overlays” (what I call “chart indicators” because I’m uneducated), and “Oscillators” (those things you put below the chart).
So which tools fall into “Price Action Trading”?
Scrolling down further in the initial article, they point out candlesticks, and support and resistance lines. But then if you scroll even further down, it leaves a little more for interpretation.
No two traders will interpret a certain price action in the same way, as each will have his or her own interpretation, defined rules and different behavioral understanding of it. On the other hand, a technical analysis scenario (like 15 DMA crossing over 50 DMA) will yield similar behavior and action (long position) from multiple traders.
So there’s a little bit of wiggle-room for things like MAs and the like. No hard definitions there.
Fine with me. This will not affect the argument much at all.
No Nonsense Forex vs The World
What do we do here?
Well when it comes to trade entries, which is what this debate is about, we here at No Nonsense Forex use technical indicators, which we referenced above.
It is all we use for this particular purpose (trade entries).
Is there anyone else out there on the internets who does it like we do?
Is there anyone out there who does it this way, without using the shitty ones I don’t endorse?
There may be, but you REALLY have to hunt to find them.
In the end it’s pretty much just us.
Us vs the rest of the Forex world.
I like our chances.
Let’s do this!
Just about everyone who trades Forex using Technical Analysis uses price action somewhere.
And 99% of them never get to where they want to be.
Now I said in the disclaimer, that I pulled that 99% figure out of thin air.
But I’d also be willing to bet that number is closer to 100% than it is 99%.
Think about it. Take the total number of FX traders in the world right now.
And figure that just about all of them would love to be able to trade Forex in some capacity for a living.
How many of them actually are?
1 out of every 100?
I really doubt it’s that high. And if this is the case, the number really is closer to 100% than it is 99%.
And what do the overwhelming majority of those traders who never quite made it trade with?
Or some combination of price action and shitty indicators.
We could end the debate right here if we wanted to play dirty. But we’re better than this.
A does not always equal B here.
…but you have to admit, it certainly does, a lot.
“But You’re Just Not Doing It Right”
And here’s where the argument goes every single time.
“You’re just not seeing it”.
“Keep at it, and you’ll be able to see it”.
And in my best Samuel L Jackson voice, I reply….
You can go ten, fifteen years without “seeing it”.
You’ve wasted so much of your money and your life for a dream that never came about.
It’s more common than you think.
And NO FREAKING WONDER failing here so common. Price action is really hard.
Not to mention the tools they give you to use are awful to boot.
I get it, there are those chosen few of you out there in Price Action world who are enlightened and can see the market in ways nobody else can.
For the rest of us mortals, there’s always some degree of guesswork involved.
And guesswork, when our hard-earned money is on the line, absolutely sucks ass.
You almost never know 100% for sure if this is the line you should be looking at, if it’s in the right place, and how far we should expect price to go.
Maybe 20 or so people in the world can do this. The other lot are lying when they pontificate in the YouTube comments.
More on these people soon.
How Long I Gotta Wait?
Learning price action trading can happen fairly quickly.
Getting good with it can take forever, and as stated above, most people never get good at it.
I mentioned in the last podcast, my old “mentor” ICT. He’s one of the price action traders at the forefront, and there’s probably nobody else out there who has come up with the concepts he has to “really see the market”.
This is certainly not a diss on him. He has lots of devoted followers.
But even he’ll tell you this is one heck of a long journey.
I saw on his Twitter how one of his students took a picture a stack of papers over a foot high. Those were his notes.
Then he went on to say how he had 4 other stacks just like that one!!
Kid, I admire your tenacity. That’s true dedication.
But for most of us, seeing that would be a complete nightmare.
All those notes, for something that may never come true for me?
Even at what I would consider the best place to learn price action trading, there are just too many turn offs for me. And I absolutely love Forex. And I’m not lazy by nature.
But I’m not alone it turned out.
Indicators To The Rescue!
For a little bit of work up front, you can find and test great indicators, take the best of the best, and put them together.
What will you have then?
At the very absolute worst — you’ll have something that removes all of the guesswork when it comes to entering trades.
And sooner than later, you can say the same for exiting trades as well.
Again, we could end the debate right here.
Because nobody, and I mean nobody, likes guesswork when it comes to their actual trading.
We want as many things working in our favor as possible. And this means eliminating the things that do not.
Guesswork is one of these things!
My Pudding Has Proof In It
So I figured I wasn’t alone when I looked back at my frustration with price action trading and the way it was taught by most people.
I started this website to see who else was out there.
If my YouTube subscribers are any indication, there are tens of thousands of you out there who felt the same way.
And who knows how many others are out there who feel the same but haven’t found this yet (share my material please).
The podcast isn’t even a year old. The channel and blog is only a bit older than that.
And already, thousands of people have had their trading fortunes turned around in this very short window of time.
By abandoning their price action training, and coming over to our side.
Now I’m not leaving out the structure, money management, and psychology aspects we preach as well.
But having a system that if at the absolute worst takes all of the guesswork out of the equation is what you’ve gained here, you now have something that gives you the confidence to focus on the other things as well.
Price action cannot do this for you, unless you’re one of the enlightened few who put in years and years of work.
Wanna take those odds?
This Whole Debate Is Rather Stupid
Yes, 1400 words in, you are reading this correctly.
It shouldn’t even be debated. You have the freedom to pick a side. I like mine better, and I explain why twice a week.
That’s all it is.
But having an Us vs Them debate, as great as it makes for my titles and such, is ridiculous.
In the end, we’re arguing which side is better, and until we have a trading battle royale (which would be awesome, but not very feasible), there will never be a real winner.
It’s subjective. And arguing subjective things as absolutes is for idiots.
If you really think this is what I do, allow me to clarify.
I have a side, and I like my side a lot better. I make videos and blogs to explain why.
I know fully how there are many different ways to get to the same desired outcome. And I want them all to win.
I just think my way works better for most people. There is no true way to measure this, so there is no definitive in the end. YOU must decide which side you like.
Now all of this being said….
Most Of The Counter-Arguments Are Ridiculous
Remember, this is virgin territory for the Price Action Warriors. They’ve never had anyone to really argue this with, and it’s their first time trying to do it.
And boy does it show.
Here are the arguments against what we do, which I find all the time in my YouTube comments and emails:
“You’re just not using (insert junk-ass Price Action tool) the right way”
You could be right (you’re probably not, but we’ll pretend)!
But what are the chances of most people discovering the exact way you’re making millions of dollars off of it?
Almost zero? Good, so my point stands — this is not a route people should take, because the odds are too heavily stacked against them.
“The millionaire Forex traders of the world all use price action. And YOU are going to sit here and say it doesn’t work?”
Yes, but learn to fucking read. It doesn’t work for most people.
I’m sure there are millionaire FX traders out there who use price action, because up until recently, there was no material on how to show you anything different!!
By default, they had no other choice. Nevertheless, they persisted and succeeded.
Good for them. They’re absolute outliers though. Your argument sucks.
You’re the type of guy who says things like
“Well, there was this one lady in Nebraska who drank a 2 litre of Pepsi every day, and lived to be 100, therefore Pepsi is probably good for you”.
The internet allowed people like you to finally have a voice, and this is the only reason I hate the internet.
Back in the day, you would have been put in a cage and wheeled around from carnival to carnival so people could laugh and poke you with sticks.
Just be happy you’re alive in this era. You got lucky.
I’ve traded price action for 25 years, you’re gonna tell me it’s wrong?
No I’m not, but your “25 years of experience” doesn’t mean anything.
Most of you have experienced this before. That awful lady at work who is mean and cranky all the time, and doesn’t even do her job well, but “she’s been here for 25 years”, and leans on that stat like there’s no tomorrow?
It likely means she’s picked up terrible habits in that time, and nobody checked her on them, so they became second nature to her, and now she’s beyond reproach.
“I have 25 years experience!!” guy is compensating heavily for being a crap employee, and doesn’t realize the argument actually works against him.
Nobody likes or respects “I have 25 years of experience!!” guy in the workplace.
If you had a better argument, you would have come up with one.
“What you need to do is trade naked charts. It’s the only way to really see the market.”
Because……you’ve tried every other way?
Here’s the thing traders….
100% of people to this point who come in and say our way of trading is inferior, has never tried it out, and isn’t going to.
And this argument comes in many forms.
“LOL, you’re going to abandon price action? Good luck with that”
“Those BIG BANKS you talk about use price action, and you’re going to go against that??”
(these people have zero idea of what TA tools the Big Banks use, they just heard this somewhere)
“An understanding of supply and demand is all you need”
And other complete nonsense.
The one thing they all have in common is not one of them has tried both ways, so not one of them is even remotely qualified to speak on this.
We can speak on this, because many of us have done both. We’ve chosen a side we like. Or we try to combine both ways, which I can’t sit here and recommend, (because I’ve done that before too) but again, I wish you the best.
But these people? Aggressively stupid.
I have little time for people who want to opine on things they know nothing about.
And speaking of this, when it comes to indicator trading, we are going to get shit on a lot for one major reason.
Most People Hate Indicators — This Is Why
So as we already stated, most people who want to argue crap like this don’t have enough information to do so.
It certainly doesn’t stop them.
But many have a sour taste in their mouths when it comes to indicators.
If the only indicators you knew about were the RSI, Stochastics, the CCI, and Bollinger Bands — you would hate them too.
These people never took the time to try anything else outside of the indicators found in the Dirty Dozen.
They tried some of them, had bad results (surprise), and had a lingering bad taste.
The real problem however, is most of these folks (and most of you), simply stopped there, and formed a hard opinion on indicators in general.
Most new arrivals to No Nonsense Forex had no idea all these other indicators existed.
They watch the Dirty Dozen video, and say things like “Well, what are we supposed to use then?”
As much as I want to call these people lazy, I really can’t because…
They REALLY DIDN’T KNOW ABOUT THE OTHER INDICATORS!! I’m blown away.
It’s like living your whole life in a small village, and finding out other villages had more than just peas and radishes to eat.
You would be resistant at first.
But I have to remember too how it’s more just plain lack of curiosity, and an indoctrination from all of these other outlets on how there are only x amount of tools there for you to use.
It’s not about “opening up your eyes to what’s happening in the market” by using price action.
It’s about “opening your eyes” to the thousands of different alternatives you had in front of you this whole time.
To this day, I can’t believe I’m one of the first people to do this.
This isn’t me patting myself on the back, this is just pure disbelief how so many people obediently stayed in the little bubble they were placed in, and not only refused to leave….
But double-down by telling people like US how great the bubble is!
It’s ludicrous. But just remember in the end:
We’re over here — and they’re over there.
Do not argue, there’s no need. We’re all happy where we are.
Most of us, at least.
It’s not really an “Us vs Them” thing in the end, do your best to not make it one.
And even though it’s a silly debate, you’re going to hear it from now on, there’s no getting around it, so you may as well know the arguments on our side of it.
And while there is no “right side”, just know you’re on a “good side”.
By the way, if you’ve noticed, I do like blurring the lines on some of these blog posts, because a lot of things here are not linear, and should not be spoken as if they are.
This debate falls under this particular category.
There’s room enough in the winner’s circle for all of us.
But just, at the very least, if you insist on making an argument against what we do here, please come with more than just platitudes and your zero experience on both sides.
For my traders, if you see people who do want to argue (and there will be a lot more believe me)….
Just let them be.
Smile and go about your work.
…………………but do link them to this blog post.