2Bull Forex Blog

A picture says a thousand words, so the quote goes. It does, and the advantage of trading using charting software is that all the information you need is available on one screen for you to analyze. You will not need to rely upon the opinions of speculators or any other third party.

There is a vast array of choice when it comes to selecting charting software. What you buy will mostly depend upon what you are looking at trading, whether it is stocks, currencies or commodities, for instance.

The data presentation can be arranged to suit individual taste and whilst no result is ever a solid guarantee, you can usually undertake back testing in order to make a reasonable judgment of the historical nature of the stock, share or whatever you are trading.

1. Live chart feed is important for traders, often know as scalpers, who wish to open and close their positions in minutes. They will likely be trading markets with high volatility such some commodities, currencies and the Forex. Some systems have an integrated chart feed and trading platform.

2. End of day charting software is mostly characterized by displaying a static set of data. This is really as much all that is necessary for those whose preference is for markets that tend to have less volatility such as many stocks or shares. When we say end of day it is meant in terms of the closing price at the end of the day.

3. Price bars are the fundamental instrument on any chart, live or otherwise. They represent four criteria, the opening, daily high, daily low, and closing price of whatever you choose to trade. Chartists usually set price bars to one of three types; a line, a bar, or a candlestick

4. Indicators are the next crucial aspect of charts. Every charting software package offers a huge range of indicators from which you can cherry pick. It is easy to apply any one indicator, or a combination. The least you can manage with the better really, as it doesn’t do any good to have you screen too cluttered and too many can cloud your judgment. I hope this is obvious.

5. Timeframes are a very useful tool enabling a couple of things. As you gain experience, you will find a comfortable time frame, or frames in which to trade. Also you should find your charting software allows you to zoom in and more closely analyze your position. It is an important tool for checking the history of what you are trading too. Depending on the age of the stock you can go back as far as its launch.

6. Back testing is to facilitate analysis of your trading strategy and provided you do not waver from your strategy, you will be ok and will gain confidence. Although the history of a stock is never a guarantee of future performance, it often can be an excellent way to become familiar with the characteristics of a stock.

Now you can see what a useful tool charting software is. Charts have not been around for ever though and you could, like chartists used to, draw them yourself. However this is a tedious and lengthy process. Charting software is fully manipulative in terms of how you wish to personalize your display and can be altered in a few clicks of your mouse. I would liken trading without charting software to trying to illuminate the universe with a battery hand torch.