Thursday, April 24, 2014

Forex Trading Charts Analysis

August 27, 2010 by  
Filed under Forex FAQ


In today forex faq, I will be giving my suggestion for the following questions

Question 1: When going long or short, do I have to consider all the 60 minutes, 15 minutes and 30 minutes charts?

Question 2: I still can’t have the lines to show me positive and negative divergence on my MACD indicator, how do i do put them on?

For the first question, there is no right or wrong answer for this question. I have known traders who simply focus on 1 forex trading chart and then make money from it and I also have friends who are making use of the multiple time frames to trade.

Personally, I use multiple time frames in forex trading to increase my probability of getting into a winning trade. This is because a 60 minutes candle is made up of four 15 minutes candles. Therefore if I am trading off the 60 minutes chart and I am looking for an opportunity to go LONG (BUY), I can go and take a look at the 15 minutes chart to see if there is a chance to go LONG as well.

Since the higher timeframe is made up by the lower timeframe, the 15 minutes chart must first show some sign of up movement before the price in the 60 minutes will move up.

I feel that there is no need to look at all the 15, 30, 60 and 240 minutes charts at the same time as it will be very complicated and you will find yourself getting into a situation of analysis paralysis.

All you need is a chart that you are using to trade and a lower time frame chart that you can use for your entry. Do note that the key to trading is Simplicity, the more complicated you make your trading strategy to be, the less likely you are going to win.

Therefore it is not a MUST to be using several time frames in your trading. If you are able to identify important support and resistance, draw proper trend line and have a good trading plan on hand. One time frame is all you need to make money from trading.

As for your second questions on the divergence on MACD, are you saying that your platform only plot the histogram and do not show you the lines. In that case, you have to either ask your platform provider or simply change to one that can show you that. I am afraid I will not be able to advice you on this area.

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Comments

2 Responses to “Forex Trading Charts Analysis”
  1. Saffiee Trunan says:

    Scalping is my preferred choice of trading Forex, but very often I end up in loss. What is the best time frame and indicators to use. Do I need to analyse the volatility of the market first or am I entering at the wrong time for scalping?. Would you like to give me as an inexperience trader the ultimate fundamental or technical guide for us to follow?

    • Kelvin says:

      Hi saffiee

      The key to successful scalping lies in your entry and exit. Due to the fast nature of scalping trade, you definitely need to have a good understanding of the major support and resistance levels as these are areas where you are going to enter and exit your trades.

      For scalpers, I recommend you to place your entry using the 5 minutes chart and you also take a look at the 15 minutes chart to see if there is any major support and resistance that can help in your entry.

      As for the indicator, I suggest you to go for oscillators like the stochastic, cci or RSI. What you should look for in these indicators are times when they are overbought or oversold as they can increase your winning probability.

      I will try to write a few more blog posts on scalping in the coming weeks.

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