Forex Indicators or Price Action?

Forex Indicators or Price Action?

The age-old debate. New Forex traders might come across this debate and be curious about the difference between these two approaches.

Should they use Forex indicators? Or just trade using Price action? This is what that article is going to answer for you.

The Difference

In Forex trading, you have to have a strategy above anything else. It doesn’t matter what you know, think, or feel.

It all comes down to what you are going to do when the markets open. You can either choose to adopt an indicator-based strategy where you use an indicator/s to identify trends as well as your entries and exits.

This can be much easier for beginners to understand because it is a much more objective way of trading. An entry either is or is not present.

There is no gray area. Many Price Action Forex traders will fault indicators for being “lagging,” which means they only give you entries or identify market trends after they have already begun. And this bugs some people.

There are many successful traders who use indicator-based systems who continuously profit from using a combination of indicators of even just one indicator that they may have created that takes multiple things into account.

Indicator-based Forex traders will really advocate for indicators because of how black and white their trading is. You can really increase your consistency by depending on indicators to give you your entries and exits.

Price Action trading is a very different animal, but it can be just as easy as learning to trade with indicators if taught well.

A good Price Action teacher can really give you a very objective approach to trading WITHOUT indicators.

Anyone who follows traders on social media will have seen at least one of them dogging indicators, saying that price action is much better because your chart is cleaner and that Price Action trading improves the accuracy of your entries and increases your ability to switch direction/bias because you would be able to judge the end of a trend much sooner than an indicator-based strategy would.

There are many successful Price Action Forex traders out there, and they seem to be more vocal for some reason. Still, there is definitely merit in removing clutter from your chart, especially as a beginner, so you don’t get overwhelmed.

Indicators Pros and Cons

Pros

  • More confirmation
  • Helps with Consistency
  • Less Discretion

 

Cons

  • Delayed Entries
  • Possibly Cluttered screen

Price Action Pros and Cons

Pros

  • More accurate Entries
  • Less Clutter

 

Cons

  • More prone to Fake-outs
  • More discretion involved
  • Need to get a good teacher
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Summary

There’s really nothing wrong with either of these trading methods. It really depends on what works for you and probably who introduced you to trading.

There is no reason you can’t combine both of these trading methods because they both work by their own merit, and many traders who do use elements from both trading approaches and those are the forex traders who are able to achieve the most consistent results.

If you feel it’s easier for you to trade with less on your chart and that helps you manage your emotions better, you could benefit from trading predominately Price Action systems.

If you feel more comfortable just taking trades based on entries your system gives you, and that keeps you level-headed, then you could benefit from trading with indicators.

Don’t let social media or Twitter traders convince you that anyone way is better than the other. Trading is all about WHAT WORKS FOR YOU. And what works for one trader might work well for another trader because we are all different, and it shows in trading.

Don’t bet the farm.

Don’t lose your shirt.

Cut the L.

Keep the W.

Happy Trading.

Indicators and price action FAQ

There’s really nothing wrong with either of these trading methods. It really depends on what works for you and probably who introduced you to trading. There is no reason you can’t combine both of these trading methods because they both work by their own merit, and many traders who do use elements from both trading approaches and those are the forex traders who are able to achieve the most consistent results.

Price action trading is a method of trading removes indicators from the decision making process of trading and purely focuses on what the price is doing in that period of time.

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Lunga Shabangu

Lunga Shabangu

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