Fx Trading Charting Styles
Most traders use technical analysis on a daily basis to determine everything from trend confirmation to exit signals.. A great thing about charting is that it really is not important what market you choose to trade,it is all dependant on the research and how you apply it to the indicators you use..
Chart Types
Time Interval
Now most traders use time charts to apply their technical indicators. An example of a time based chart would be an hour time based interval when on the hour a new candle will appear on your charting package, as this is your choosen time frame to trade with..
A major advantage of this chart type in they are included by every forex broker free of charge once you have access to their trading platform..With time based bars thy are recorded on the chart at the interval you have choosen to trade with, and trading volume and market activity have no impact on time charts and this can be an important aspect of technical analysis..
Now these are my personal favorite so I may be a little biased here as I trade them exclusively as they give me a better over view of the price action.tick charts can give you as the trader another tool to get more information from the currency market which can be very benefical to any trader.. TicK based trading charts are calculated on the number of orders per candle,this will be significant as you can view if the price action is slow or fast depending on market volume.. For example an 89 tick chart requires that 89 trading transactions are needed to have happened before a candle will form and the same in a 233 tick chart where 233 transactions need to happen before candle formation.
But they are not just for small time frames either you can use them to slow up the chart action by using a 375 or 610 tick charts for your swing trading analysis. I apply a 610 tick chart to gauge the overall trend of the market I personally trade..
These are not free charts which is there down fall but you can use a charting package such as ninja trader which is free to use and subscribe to a data provider such as Barchart and get live market data directly into ninja trader. Would you believe the information you can receive by applying these charts to your cuurrent trading system may just make a sizeable differentce to your overall performance..
These are similar to tick charts so if you use a 2000 volume chart when 2000 transactions are completed a new bar will form. Fibonacci numbers are used by most traders to confirm the size of the volume chart they wopuld like to trade with..
Range Bars
Range bars are based on the changing of price at a certain range you choose. For example a ten bar range chart on the Russell means that if the bar opens at 583.0 is when a new candle will be printed once 584 is reached..0 is hit if you are long the market or at 582.0 if going short in the market you are trading.. By their nature a whole new.
An asset using range bars is in a choppy market.. Market noise can be eliminated sometimes with these chart types especially in slower markets as the number of orders determine the bars that print..
Overview
As you can see there are significant advantage over time based charts using tick, volume or range bars,but unfortunately you will have to purchase a data feed into ninja trader if your broker is not compatible (refer to their websites as many brokers are ). The charts that are available toi you through your current broker are quite adequate for new traders in the market.. As you know more about the market you might want to apply theses as later options.. This currency trading for dummies guide to charting types and can be a way to improve your trading strategy..
