Price action vs Indicators

I’m new in forex and from what I’ve read and watch regarding forex from these so called “gurus”, I should forget about indicators and look at the price action instead.

I’ve opened a $100 account so I could practice both. The result is different for me though.

I’ve got 8/10 (average) take profit using stochastic oscillator and I’ve burned 4/5 positions (average) using engulfing candle stick.

I’m not sure if it’s just me who is not good on finding a “real” engulfing sticks but every time I found one it goes to the opposite way.

Just want to ask do you guys rely more on price action or indicators? I know there’s a fundamental aspect like “news” but let’s just focus on these two first.

Look back at the losing trades. What was the trend before the engulfing candle? What direction did price move after you entered, compared with the principal trend?

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@tommor

I’m only using engulfing contrary to a trend. If it’s going down and I see a bullish candle, I go buy and vice versa.

As per my stochastic oscillator strategy, I’m using a very safe/conservative approach. If I will use a 1 hour time frame, I will look first on what’s the trend on the 4 hours time frame if it’s going up, I will wait for bearish trend on the 1 hour time frame to go on a bullish direction and then I will buy only. I strictly put $2 take profit on each position.

Like what I said I was able to have an average of 8/10 take profit using the indicator. Though my biggest mistake is that I didn’t not put any stop loss on the two and burned $30 of my $100.

The age old question price action or indicators; which is better. Here’s my opinion Most forex traders define price action as trading with out indicators using support and resistance. Others define it however they need it to be. For example support and resistance and a moving average. The proper definition of price action is, the cost of what someone is will to pay and what someone is willing to sell for(price) that’s measured (action).

Anyway indicators have been developed to help traders when they are analyzing price action mostly based on where price has been in the past, when it changed and what happened when it did and based on that we try to predict where it could possibly go in the future. The mistake most traders make is that they think indicators are perfect an I ud forget that they should only be used along with several other things for analysis. You also must realize that nothing works all the time that’s why you analyze and measure risk in your trades

I break my trades down into: trend momentum, cycle support and resistance measure and analyze and measure each. Some I do without indicators and some without. I draw support, resistance and trend lines and use indicators to measure momentum and cycle. To measure them without indicators to me would be like mowing your lawn with a pair of scissors instead of a law mower. I mean you could do it. . .but why
Hope that helps
Gp.

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Hello, again. Not picking on you. This is the second Q I’ve run into , so here we go…

It is the leading question when starting out: to use indicators or not. Don’t abandon the idea altogether. Indicators can be useful. For example, using a combination of a volume indicator and an EMA, you can get both direction and market sentiment without too much clutter.

Eventually, you’ll get to where you’ll find the right combo for you. Don’t trade like anyone else. Trade like you.

Spot forex has no “volume” available, Steve.

It isn’t a centralized market, so by definition there can be no way of measuring, recording or displaying “volume”.

If your broker is offering or presenting something they call “volume”, that’s only their own volume, and has nothing to do with the interbank market at all. It has no value to a retail spot-forex trader, though counterparties pretending to be “brokers” love their “customers” to imagine that it has.

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@matzhee I really only use price action, more specifically candlestick formations, chart patterns and market structures only. Works like a charm all the damn time. Recently I took a buy trade on EURUSD based on the major trend and head and shoulder formation. You can check out my analysis on my TradingView platform. My username is : Khanyangombane

I started off trading with only fundamentals 3 years ago when I was introduced to the markets. Technicals, for me have been more consistent in the long haul than fundamentals. So my point is, you don’t have to rely on any indicator to give you clear signals on where your market is heading. Once you know the principles and apply them then you’re all set!

I hope my two cents brought you some value

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i rely more on price action (like 90% price action and 10% indicators). ALL indicators are based on price action so why wouldn’t you rely more on them?

by the time your chosen indicator has given you the signal to enter, the trend is already halfway to being over so you’re missing out on a lot of pips.

Exactly.

Since re-joining this forum and posting here a bit, and reading here quite often, it’s really struck me that some retail spot traders seem not to appreciate this at all!

I imagine the reason (if it’s thought about at all) is along the lines of “my broker’s charts have this thing available called ‘volume’ so I suppose there must be volume available, and all the stuff I’ve read online about volume must apply to it”?

Few get as far as thinking “Hold on a minute: this is a decentralized market, so how can anyone possibly know what’s being transacted in it, in real time?”

To be honest, I think few get as far as understanding the difference between a broker and a counterparty, let alone asking themselves “Why does my counterparty, who’s trading against me, want me to have this available?”

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Even if that were true, and i’m not sure it is, numbers of orders placed can give you an idea of the difference in market interest from one time period to the next.

AT THAT ‘BROKERAGE’ (which means absolutely nothing at all!). You’re still completely missing the point, Steve.

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I disagree, volume can be measured. Even if order flows are limited to the broker’s order flows, you at least have a baseline. My broker happens to be one of the largest, and I happen to trust them. I can’t say I trust your info though. Thanks for your input, have a nice day.

This has zero relevance.

However much you “trust” them, and however well placed that trust is, they don’t have information that isn’t available because it can’t be monitored, measured or recorded. This is just factual, for God’s sake. What’s wrong with you?

It’s not about “being right”, Steve.

It’s about understanding what volume is and what it signifies.

Retail forex “brokers” (even the biggest in the world) are a tiny drop in the ocean. Sorry, but you’re totally missing the point.

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We’ll have to agree to disagree. I think you are the one who is hung up on being right. Instead of spending all day here trying to find things that are wrong with other people’s posts, you may want to open up a chart and learn how to read it. May make you abetter trader, if that’s really what you do.

Again you resort to personal attacks, when you’re shown to be mistaken - and just try to denigrate and belittle other members? And then you’re surprised that so many members so frequently object to your behavior here. :frowning:

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It really saddens me to see that you can’t disagree with anyone without making snide personal comments designed to make them look incompetent, Steve.

It’s so offensive.

I think was lost that guy James (“RiskonFX”) in protest at your behaviour, a while back? And now you’re back to your usual tricks again.

People would respect you more, if you didn’t behave like this when people collectively point out that you were mistaken about something.

Can’t we just all get along, and not be so rude??

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BOTH!!! For sure!

Price Action is something all good traders need to know, but some indicators can be very useful alongside this.

“contrary to a trend” - this might be something to look into.

There’s a belief amongst retail traders that anticipating a reversal by taking a reversal signal is the way to make profit. A reversal signal isn’t a reversal, the change in price trend is a reversal. No money comes to you from the engulfing candle, its what happens afterwards that allows you to make a profit. If the signal succeeds, a new trend is formed: if the signal fails, the old trend resumes.

Either way, it seems to me that trends are more important than signals.

It depends on what you understand the most. You will find the supporters of both. Even you will find people who are opposing one or the other. But the fact is what you understand the most. Every person is unique. You have to find out what suits you the most.

Yeah, I know, it’s so unfair how I’m the only one on this site who makes “snide personal comments.”