Fx Trading Charting Styles
Whether you are a swing or a day trader technical analysis can provide important key to how the forex trading system interprets the market.. 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..
Every broker has these time based charts included in their trading platform and this is all included when you have registered an account with them..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 charts are derived from quantity of orders in the market at the current time, this is relevant in the event the amrket conditions are quite active or if the oppoaite case once the is quite slow with hardly an volume at this point of time. As an example a 144 tick chart needs 144 orders to be filled in the market prior to a candle forming and the same as a 610 tick chart when 233 orders are filled in the market to form another candle..
You can also apply these to larger timeframes by increasing the number to form a swing trading timeframe also, these are not just suited to day trading.. I apply a 610 tick chart to gauge the overall trend of the market I personally trade..
These types of charts are not included in your trading platform which is definitely their weakness but to overcome this ninja trader platform which is available free ande you could open a trading account with a compatable platform these are then available at no extra cost to your trading.. 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. A large number of traders use Fibonacci numbers to pick what size volume chart they would like to apply to their trading..
Range Bars
Range bars are based on the changing of price at a certain range you choose. To use the Russell emini as an example a 10 bar range type chart means when the bar opens 583.0 is when a new candle will be printed once 584 is reached..0 is reached if going long or 582.0 if shorting the market. By their nature a fresh bar is opened if the high or low of the spcecific price action has been reached..
A benefit to the trader using range bars is when the market is in periods of consolidation. 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.. But as your knowledge grows you may want to consider these as other options. This currency trading for dummies guide to charting types and can be a way to improve your trading strategy..