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It seems that most forex traders now are looking for the short cut, instead of using the oldest form of technical analysis: trading just using price action. Most traders though don’t seem to be interested.

You can tell this is true by just going to any forex forum. What do you normally see people talking about? Usually its about some magical system filled with a bunch of indicators or a Forex Expert Advisor that basically uses those same lagging indicators to come up with an automated forex trading system.

Can you tell what’s wrong with all of this?

Off the top of their head they should realize that all these indicators like moving averages or stochastics are always lagging. They are great if you want to know what has already happened, but it provides no ability to forecast future prices.

Another important thing for traders to realize is that approximately 95% of all trades end up losing money. Since this is true why on earth would you want to be doing the same exact methods that 95% od the trading world is doing?

You also need to think about the fact that most traders on a forum are usually struggling traders. If they weren’t struggling why would they be on a forum to learn about trading. The real successful traders don’t really have the time. They are too busy trading the markets.

What’s really increased in popularity are the Forex Expert Advisors. For those that don’t know, these are basically automated trading machines or robots. Developers program them using lagging indicators so the market trades automatically while you’re away.

I could see why this would attract most newbies traders. I mean, who wouldn’t want to have all that free time to yourself. You can go to the beach, the ballgame, dinner and a movie and all the meanwhile you’re becoming rich, right? Well, not exactly. That’s not the way it works.

With Forex Expert Advisors, you’re asking a computer to do something that 95% of forex traders can’t even do. If you know anything about the forex markets, you know that news can really move the markets in a big way. Even more so than any other markets. How is a computer going to account for that.

For those that want to have a deeper understanding of the market then, I recommend you get rid of all your indicators and start trading the markets on a clean chart. Just follow the price action. See if you can start to notice patterns that are always happening. These are the kind of patterns you need to focus on, because this is how you forecast future prices.