Forex Trading Reasons To Use Price Action VS News, Choose Where?
This is a hot topic for the seasoned traders, from the long time we are trading, which is the trading reference most “steady” according to each of you? Is your capital trading purely from the hottest news or skill reading the price change pattern of price action?
Before moving the topic, we agree first if the benchmarking is essentially rooted in technical and fundamental analysis, in other words we do not have to debate the A to Z indicator or the inflationary influence on the central bank’s policy, let it be the subject of another topic.
If so, what kind of trading guidelines will we review?
Broadly speaking, there are two kinds of trading reference types, namely; naked chart and systematic chart (chart completed with indicator and news analysis).
Want Naked Or Use Complete Accessories?
To be clear the characteristics, advantages and disadvantages of each trading reference, we first describe one by one:
A) Price Action Setup (plain, naked chart)
Because in fact the chart is naked, it is certain the source of information is limited. The focus of information is of course from the price change graph, generally the candlestick pattern becomes the main weapon for traders with these trademark trading references.
Because it’s not just a newbie trader who uses Price Action Setup, master traders like Niall Fuller holds Price Action Setup as the best trading reference because of its simplicity and simplicity.
The advantage is that the main source of information is nothing but the price change graph itself, no need to confuse one source of information or overlap with other information. The main point is just to capitalize on the understanding of Price Action as a reflection of the power of buyer vs seller and support-resistance level to determine the entry and exit.
The downside, just a newbie trader will have difficulty in using this trading reference. Lack of clues in determining when they should be trap them into unfavorable positions.
B) News Trading (systematic chart)
News Trading is very difficult to apply to the naked chart, because following the news alone is not necessarily enough to show when the trader must entry and exit the market with the prediction. That is the reason why news trading is dependent on other indicators to confirm continuity and reversal trends.
Momentum-oscillator indicators (RSI, MACD, OBV, etc.) are generally a mainstay for traders on the basis of news trading. They use these indicators to ascertain whether price movements change according to market participants’ sentiments to the latest news or instead turn against predictions.
Excess, the use of indicators will clarify the signals to open and close positions. As long as traders have a well-organized system of display and display indicators, even newbie traders can simply “clop” with reference to news trading.
The drawback, often fake signal raised by one indicator of other indicators, instead of getting a clear signal, even stuck the noise, especially if the indicators just from pairs of overlap here and there, the tail actually makes traders hesitate to determine the position of open and exit.
Regardless of which debate is the best trading reference (there will be no end), every trader has a tendency to perform better with certain trading references , even if there is a trader who combines news trading with the help of price action as a helper of his entry-exit strategy.
Note that there is no absolute key or cheat sheet to record the best trading record. The best path to consistent profit is finding the most appropriate method for each trader. The question is, do you have to try first, want to choose which one !?