After the series “All about Price Action”, I received a lot of questions from readers. The contents are about whether to trade with technical indicators or just use Price Action. To answer those questions, let’s analyze the differences, similarities, and advantages of these two somewhat opposing schools. From there, you will know which style you are suitable for to make the best choice when trading in Olymp Trade.
Differences and similarities between technical indicators and Price Action
The most obvious difference between the two schools is the information you receive.
– With Price Action, you have to look directly at the chart and observe each candle or price pattern carefully to understand what is going to happen next. In general, you need to focus on information from individual candlesticks or clusters to predict future price trends.
– As for technical indicators, the information you receive will be provided from the indicators you use on the chart.
As for the common point, these two schools both bring information to users. Speaking of which, many traders must think that indicators just simply provide signals to enter orders. Doesn’t it sound very flexible? But if you are a trader who loves indicators and delves into them, you will find that they are not passive but the passivity comes from the traders who use them.
In short, Indicators and Price Action are both information we will get when using them. The difference here is how you use them to approach the market. With the Price Action school, you choose a standard view coming from the original price of the candles. With the indicator school, you choose a different perspective through one or many indicators.
Pros and cons of Price Action trading in Olymp Trade
As shared on this blog, you also know that I am a price action expert. So what I say here is drawn from my own bloody experiences. Next are some of my heart and soul judgments that you can refer to.
If you master the price action, predicting the next color of the candle is no longer a problem. When experienced long enough, you will see the cycle of price patterns repeating over and over again. From there, you can quickly seize the golden opportunities every time the loop is about to appear. Because the market is made up of crowd psychology. people always act on emotions in the same circumstances. That is the key to Price Action, which will help you to recognize the repeating behavior to plan the trade in the most profitable way for you.
But Price Action also has its downside, it’s very confusing. If you think you just need to remember the shapes of Pin Bar, candlestick patterns, and chart patterns to execute trades according to a certain pattern, that’s not Price Action indeed. If it is Price Action, you have to know how to explain why those candles appear like that and what will happen in the future. That is not easy at all.
Pros and cons of technical indicators in Olymp Trade
Like many other traders, before I found Price Action, I struggled with technical indicators to find my holy grail. The following will be some of my own experiences during the trading process.
You should consider the technical indicators you use as a filter. That is, the original information from the price will flow through the indicator and into a language that is easier to understand. When you look at it, your analysis will become simpler. You will also quickly understand what is going on in the market. If you understand a certain indicator well, you will find that it also offers golden opportunities to reap huge profits.
Besides, technical indicators also have some basic disadvantages. That is, it will make you dependent on it and you will look for trading signals from them. When you overuse them, the signs overlap, leading to entering orders uncontrollably due to dozen of confusing indicators on the screen.
Conclusion
After going through my trading process from using technical indicators to Price Action, you also somewhat know which style will suit you. Currently, I rarely use technical indicators on my charts but never deny the great advantages that they bring. Because basically, both schools are the same. Don’t just assume that Price Action or Indicator is not effective because the other one looks cooler. Only when it brings stable profits every week, month, and year when trading on Olymp Trade, will that be your holy grail.
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