I understand the basics of following a system based on indicators.
Indicators you have values you can check. With moving averages
you have crossovers.
With candlesticks things are not so consistent,unless I am mistaken.
I would know if they are if some robots are based on candlesticks
instead of indicators
Forget about indicators, concentrate on price action. Candlesticks are one way to represent price action per one unit time frame, candlestick patterns are ways to interpret PA over several time frames. Both give a well of information.
I’ve said this often in several threads…I gave up on indicators a few weeks ago, and it’s done wonders for my trading. Never looked back. I used CS patterns, support and resistance levels, and fibs. That’s it.
I would use the macd or stochastics purely for spotting divergences, that’s it.
Synergy
How do you use price action as a part of a system.
I need to know how to trade systematically so I am
able to monitor progress.
A system is simply a set of rules for entering a trade, along with a stop loss (where the trade idea become invalid and you close your position) and a profit target (where you close all or part of your position for profit).
What I’m suggesting to you is to build a trading system based on price action alone, and forget the indicators. More specifically, learn to draw support and resistance lines, fibs, notice weekly monthy his and los, and learn to read candle sticks and candle stick patterns. Watch how price acts to these levels. When you get an good sense of this, then build a system around it.
Specifically, determine when to enter trades based on the bounce or break of these levels. Learn about confluence of several such levels (his/los, s and r, fib levels, and how they act to indicate price bouncing off or breaking through them.
I’m trying to get you to think about learning to read price action, before you start thinking about a system. If not you will be tuning a mechanical system, and increasing in your knowledge about the system, but not necessarily learning much about price action, which in fact is the only thing you need. All indicators are derived from it, and they can jumble a newby’s thinking. If your system fails, you won’t have anything to fall back on to make improvements.
Google James16 chart thread, on Forex Factory, and start from there. Read through the thread, there is a wealth of information, all you need to become a profitable trader.
Demo for minimum 6 months, profitably. And measure your progress over the span of years.
Good Luck,
Synergy
I do want to approach Forex by use of logical understanding. Rather then
following perceptually correct system. Price action seem to be the way to
go.
Do you think jumping up to a long term chart, to look at larger candle, help
as much as slow moving averages, as a signal indicator for positive trend. Because even in short term trading, I want only to trade in the direction of a longer term trade.
Larger time frames are more reliable. When you spot a strong trend, or a trade setup, you can move down to the lower TFs and look for more price action for a better entry into the trade.
Synergy
http://forums.babypips.com/newbie-island/39634-pure-price-action-dummies.html
Price action without Indicators.
good for 40 to 100 pips per entry. You get about 4 to 5 entries a day per pair.
Hope it helps.
Good question.
Price action is the system.
No guestimation, no predicting.
If you understand price action, then you will be able to see forex in a totally different light.
Suddenly making a living out of Forex no longer seems like something that only a few could do.
Try it. I highly recommend it.