Greetings!
I am a full-time FOREX trader. It was a grueling journey to learn how to trade, and one thing I wish I had was a mentor I could trust to walk me through things. But since I didn’t want to pay anyone for training, I chose to learn on my own, and felt that it was possible to do so for free from information found online.
I didn’t want to do any paid training because everywhere I looked I found conflicting information, and mentors arguing their conflicting beliefs about how to trade successfully. I bought a couple books, but after reading a couple pages, realized they were worthless, and discarded them.
I realize there is more than one way to learn. And more than one way to trade. I decided I would find my way. What works for me. I’m not saying that people can’t learn by paying some mentor out there. I’m sure it’s possible. But I just found that the more I learned, the more I found reasons to go my own way.
My way is pure price action…
Some thoughts on what has helped me to learn to read price action.
Some never progress past learning the alphabet in price action. But learning the alphabet is only the first step. Learning to read AND understand is the key…
Some people even after learning to read price action, never learn to understand it. Very similar to learning a new language, I’ve seen many people who learn to read, but don’t know what they are reading. Price action is very similar, in that reading and understanding is key.
Next step is actually acting on what the price action is telling you, which is a whole other topic…
The learning process goes something like this (from my experience)…
price action language - PA
Learning to recognize some “letters” of PA results in thinking you actually know something about PA, and get false hopes with a little success, then don’t understand why it suddenly all starts to look like a confusing mess, and you lose one trade after another.
Then after persevering with more learning, you can now learn “words” and and start to have a little more success, but your failures still far outweigh your winning trades, and it is still discouraging to say the least, as you still feel like most of the time you are not sure of what the price is really telling you.
Then you keep learning, and understanding more. You can sometimes see sentences and paragraphs. But you really still don’t know the chapters and theme of the book. So, it seems like you should be able to get there, and becomes more frustrating as you feel like you know everything you need know in order to read PA, but just can’t do it.
Finally, once you start seeing the chapters, the theme of the book starts to become evident, and it all starts coming together. And you start having more success, but still struggle at times, since each new trading decision is a new story to understand.
Everytime you enter a trade, it is like reading a book or story. What direction is the story taking you? Is it clear? Or is the story incomplete and you should wait for more information? How long is the story? i.e. how long do you anticipate the trade should last, not in terms of time, but in terms of seeing an end to the trade in terms of where you expect it to reverse.
Furthermore… You have to understand the story as it unfolds. It’s very easy to look at prior PA history, and look at all the trades you could have entered but didn’t enter. But what you don’t see is all the false signals, or PA patterns that were part of a bigger picture, that could have mislead you if you take them out of context.
It is imperative that one learns to read PA as it unfolds, as it is happening in real time. Studying charts will only get you so far. One has to progress to where the focus is there to understand what the PA is saying as it is saying it, and at the same time relate it to what has already been said, so as to understand the direction of the story that is being told, and finally to recognize if you have enough information to enter a trade, or if you need more information. And finally to anticipate, what kind of information you are waiting for to complete the story…
A pin bar is a perfect example of what is stated above. I think I lost more money entering trades based on pin bars, than any other price action pattern. Until I learned what a pin bar actually is, and how to associate it with the context. Then I saw that there is never a situation that I would enter a trade based solely on a pin bar.
What is a pin bar? It is like the later “A”. It doesn’t tell you anything. It’s just a letter. You have to relate it to the word, paragraph, chapter, and story it is part of.
So, the process of learning to read price action is clear, just like the process of learning a language is clear. But how does one know if they can succeed?
Have you ever learned to do anything similar to learning to read price action? Yes. You are reading this. You have learned to read and understand a language.
People who know more than one language are good candidates to be able to learn price action. People who have learned programming languages are also good candidates.
But there many other factors. How well are you at understanding and following direction? How is your communication skills? Do you listen with the intent of understanding, and only respond after you understand? How honest are you with yourself? These are critical factors in learning to read, understand and follow the direction of what price is telling you. Many other factors involved…
Bottom line is that anyone who reads and understands any language, even if it is just one language, can learn to read and understand price action. And if they learn to follow the direction of what the PA tells them, they can become a successful trader…
Hence, I’m sharing what I know in this live journal. I will document (in videos) every trade decision I make, and when possible, I’ll document it live as I’m making it, or before I’m about to pull the trigger.
Here’s all the videos I’ve uploaded so far. I will continue to post updates and videos, as long as it doesn’t negatively affect my trading success…
Hope this helps anyone who comes across this thread…