Are You Using Right Charts For Forex Trading?
Most people prefer to use charting provided by their broker. Though this may seem harmless but could result in disasters. Let me tell you why.
Due to Forex 24 hour nature each broker has a different time for the new daily candle depending on the location and server time. As we know that daily candles are formed once in 24 hour period. However not all brokers are same and they differ as to when their charting platform opens the new daily candle. Our goal is to find the broker whose charting platform is the most ideal for technical analysis.
Lets think for a second, what makes technical analysis work? The reason it work is due to the fact that it not only represents market behavior but also widely understood and practiced by big institutional and bank traders. It is true that technical analysis is a self fulfilling prophecy and Bank and Institutional traders are the ones moving the market more than any other players. So this brings us to a very important point that what are these people looking at. Are they trading on a daily chart? If yes then when do they analyze these charts? Are they trading intra day? Then what time frame are they looking at? Is it a five-minute chart or an hourly chart?
Going back to stock market, where it all began and New York being the center location for all stock trading activities. A typical trading session ends at 5 PM EST. This is the time when most bank and institutional traders look to analyze daily trades. Hence this is the time we should also be looking at when placing and analyzing daily trades. The idea is to look at the same price action as them so as to match their actions with ours. By doing this you would more accurately draw tread lines, accurately analyze candlestick patterns and indicators would sync up better.
So what charting platform meets our requirement? From my research I found that FXDD MT4 platform has the new daily candle at 5 PM EST. I personally use FXDD platform for my charting however I don’t use them to place live trades. I use Dukascopy and MBT for my live trading simply because they are commission based and have tighter spreads. I do not recommend or endorse FXDD for live trading.
To obtain FXDD charting platform simply go on their website and register for an Demo account. Once you have finished the demo account period, you can open a new account from the MT4 platform itself. Click on File Menu and then click ” open an account”. You can repeat this process as long as you wish. Also feel free to use any other broker which meets our requirement. The whole idea is to follow the bank and institutional traders.
Very interesting. I am brand new to forex trading, and there is such a huge sweel of info out there. My biggest problem has been evertime i found some info , they are normal trying to sell you something, so this blog is a welcome releif. So thank you for the information, which I am taking note.
In the past I used that FXDD MT4 demo account but noticed that they stay under restricted NFA rules. I changed to FXCM MT4 that supposed its non dealing desk.
I guess that you mentioned I found that if we requiere to make this like a business we need pay for a good and reliable data feed and charting. What do you think about FibonacciTrader.com or TradeNavigator?
Hi Maurico,
I am not familiar with either of them, sorry can’t comment.
hi firepips,
thanks for his post really interesting, i know when "Bank and Institutional traders " analyse charts.
but what they used for technical analysis (MACD? RSI? ELLIOT? FIBO? etc…)
and also, on what time frame are they looking for (or at) ?
may be it was in your post and i miss it (sorry for that) else big thanks in advance and all thre best
From what I know they only look at indicators to confirm entries for the trades they already in and not to initiate new trades. They also have all sorts of trades, from day traders to position traders.
how can i know when the banks are in market so that i can follow in their direction?.
That's a million dollar question my friend !
ok thanks firepips
Have you tried 00.00GMT charting package (like IBFX) ? That one has a new 4H candle at the start of the london session (in winter).
As I mentioned above why 5PM EST charts are important, hence I don't try charts that use any other time.