Price action analysis is a method for reading a “naked” price chart that will supply you with the necessary information to develop your own consistently profitable trading methodology. Notice I said method and not system. Mechanical systems tend to be very attractive to the beginning trader because they seem to make the process of trade entry and exit almost mindless and completely stress free. Well, the old saying “if it’s too good to be true, it probably is”, never fit more perfectly here. Systems, as they are commonly referred to, offer a strict set of predefined rules that do not offer the trader any discretion in their entry or exit points. Companies sell these systems to investors for thousands of dollars and promise they will earn their money back many times over. What they don’t tell you is that trading is NOT as easy as pressing a button with no thought or regard about what you are doing. Mechanical systems can never perform consistently over time because they do not give the trader any discretion to take into account ever changing market variables. What you need is a method, or a way to think about the market that puts it in context at any given moment in time, not just a frozen frame from history. A solid education in price action analysis is all you need to develop a method that will lead toward your ultimate trading success.
