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Market Analysis

Technical Analysis Software – Five Features That Make Trading Easier

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A technical analysis software is a great tool for any trader to predict the future market movement; this can be done by analyzing charts, utilizing backtesting, etc. If you have learnt manual trading, you must realize how confusing it is to analyze many charts, prices, and volume data in order to make a profitable entry decision.

Using a technical analysis software can greatly help you to make the best entry and exit decisions.

The features of this software may vary from the one that only help you in specific area to the one that will automate all the process for you. These are some features of a technical analysis software:

1. Charting
Charting is the bread and butter of technical analysis. Basically, no technical analysis can be done without charting. The chart form is a graphical interface that presents price, volume, and technical analysis indicator such as Elliot Wave, Fibonacci, Gann Fan, etc. There are time frame selection available so you can pick the one that match your strategies.

When selecting a time frame, you can choose from tick (seconds), minutes, daily, weekly, to monthly. Viewing historical data on a specific period of time is also possible; you just input the date range that you want.

2. Back Testing
Back testing is used when you are testing various trading strategies or systems. In order to do this, you convert your strategies into a set of rules and test it against a time frame of the historical data and see the results.

This is a good mehtod, but remember not to depend on it too much; it has proven to make many traders fails if not used carefully. The reason is they tested their strategies with historical data and keep modified it so it can be a profitable strategy during that time period. Most of the time, these tester will forget to test their modified strategy in current market condition. This is not a wise decision; a strategy that works well in 2001 but fail at the current condition is as good as trash.

If you have a strategy that worked with historical data, open a practice account and have it against current market; if it can survive and give you adequate profit for at least two months, then you have a working trading strategy.

3. Alerts
Forex traders using alert software to notify them when the particular conditions are met at the market. For instance: the prices has gone through support or resistance line. This notification will be send to the trader via screen pop up, email, short messages, instant messenger, or any other communication means.

4. Custom Indicators
In a good technical analysis software, you can use, customize, or combine various standard indicators such as MVA (Simple Moving Average), EMA (Exponential Weighted Moving Average), LWMA (Linear Weighted Moving Average), etc. If you have better skills, creating a new indicator to support your strategies is not impossible.

5. Broker Interface
Certain technical analysis software has feature that allows it to integrate itself with a brokerage platform, thus you can trades on a familiar platform. This will makes your trading process easier because you can input orders directly from the chart.

Using technical analysis software can make market analysis, deciding entry and exit prices, and predict future market movement a lot easier. If you enjoy analyzing market and don’t want to depend on somebody else for that, this software is a must have.

Market Analysis

The Forex Market – Deciding When and When not to Trade

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The movie ‘A Good Year’ begins with a scene that takes place in the financial centers of London, England where the protagonist Max Skinner earns over $70 million dollars in a single morning with his agressive trading style. There is a quote from that scene that is relevant to all traders: “The secret to riches is the same as the secret to comedy… Timing.”

In currency trading, knowing when to get in and knowing when to get out is what its all about. Having a profitable trading strategy is a great thing, but even the best trading strategy in the world will fall apart if it is not executed with proper entry and exit points. This article will show you a few forex market analysis methods that you can use to determine when is a good time to trade, and more importantly when to stay on the sidelines.

If you are already a trader then you have probably narrowed down a list of currency pairs (or perhaps just a single popular currency pair like the EUR/USD) that you feel comfortable trading and that fits your trading style. Once you know the pair you are trading, the next step is to open up your price charts and determine where the market is and where it is likely to go next.

One of the best ways to determine the overall trend of any set of price data is to overlay a 200-period moving average line. This principle applies whether you are looking at a 15-minute chart or a daily chart, and the nature of your trading strategy will determine how big of a price movement you are trying to capture and consequently which time frame is most relevant to your trading.

If you had a short-term forex trading strategy where you went for gains in the range of 10-30 pips per trade, a 10-minute or 15-minute chart would serve you well and you could look at your moving average line to see if the market is in an uptrend, a downtrend, or if there is no defined trend. You may likely want to stay out of the market if there is a sideways moving market because these market conditions are the hardest to predict.

It will also serve you well to bring up a longer term price chart for your chosen currency pair such as a 4-hour or daily chart and to bring up your 200-period moving average line on this chart as well to see what the overall activity of this currency pair has been over the past weeks and months. With this knowledge you will know what type of market conditions you are dealing with and whether you should trade an open position or stay out of the market.