Forex Charting Different Styles
Technical analysis is very important to most traders as it provides the back bone of your trading system whether you will be a day trader or a swing trader. 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..
The big advantage of time based chart intervals is that all brokers include them at no extra cost in your 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 are beneficial because they allow traders to gather information about the trading activity that is currently being seen in the market. 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. 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.
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 use a 610 tick chart to determine the overall trend of the market.
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. But as a trader do you think that it would improve you trading or help with your analysis of the market, I think you might be quite surprised the information that can be taken from them.
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. For example a ten bar range chart on the Russell means that if the bar opens at 583.0 are new bar will not be formed until a price of 584.0 is hit if you are long the market or at 582.if going short in the market it would be 0.. By their nature a whole new.
A gain to any forex trader applying range bars is using them in a period of the market moving sideways.. Fewer bars print in times of lower volume which can be prior to news or even dyas before long weekends, and this helps traders get an idea of a market chopping sideways..
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 ). As new traders you might want to just use the charts made available to you by the broker which is fine. 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..