There is a very wide choice of currency broker companies online and when you are starting out in forex trading it can be difficult to find the best. We tend to be attracted by advertising, assuming they are all working in the same way. In fact this is not true. Foreign exchange brokers have very different business models which affect the way that they operate. In some cases, you may be surprised to hear that they could be working against their clients instead of for them.
Of course traditionally a broker carries out his clients' instructions, placing orders for them in the market. Originally brokers worked with telephone orders and simply placed the order for the best price that they could get through their dealing desk. These days, everything is done online so that clients put in their orders for a certain price. However, you do still need a broker who will connect to the market through their software platform.
Many brokers still work in the old way, placing orders for clients as they are instructed. These are often the brokers who run standard forex accounts with minimum investment of $10,000 and upward. But the internet has opened up forex trading to people with much lower investment funds. More recently, companies have come on the scene to cater for these smaller investors and they do not necessarily follow the pattern of traditional brokers. To cut costs, they usually do not have their own dealing desks and they may operate in some very different ways. This can have important consequences for your funds and how they are managed.
So let's take a look at the types of business model that you may come across in your search for a currency broker.
No Dealing Desk (NDD) Currency Brokers
NDD brokers work in a similar way to brokers with dealing desks, but they use a range of liquidity providers to actually match their clients' orders in the market. Competition between liquidity providers keeps the spread low, even though the broker usually increases the spread to cover their own costs and make some money.
Electronic Communications Network (ECN)
Forex brokers who use the ECN can access an online network where trades are filled. Many market makers work this way, as well as some brokers, banks and other large currency traders. Spread is usually low but you may be charged a fee per trade.
Market Makers
Market makers are not brokers in the true sense because instead of placing your order in the market they will match it themselves and then cover themselves against any loss by taking a position in the ECN or market that offsets their commitment to you either partially or fully. Market makers set their own prices, although of course these will be related to market prices. They often do not like clients to use scalping strategies because the very short term nature of these trades makes it hard for them to offset their risk. Some traders are happy to use market makers but others consider that they have a conflict of interest which may work against you as a trader.
Bucket Shops
Forex bucket shops are like bet takers in that they simply match your trade without necessarily taking any position in the market. They may not even have any connection into the real currency market. They win if you lose, so if you are successful they will probably close your account and return your funds. There is really no point in getting involved with a bucket shop unless you just want experience at very low levels of investment, and plan to lose money. They are illegal in some jurisdictions, and do not deserve to be described as a currency broker.
Thursday, October 29, 2009
Monday, October 19, 2009
Best Expert Advisors: Reviews
The best expert advisors can help you to make a lot of money with forex trading, while a bad EA can simply be a drain on your cash. So how do you tell them apart? Most people do this by looking at reviews.
However, online reviews can be a mixed blessing when it comes to something as important as an expert advisor. In case you do not know, an EA is a forex robot or automated currency trading system that runs on the popular platform known as Metatrader 4. Basically, you hook up the robot to your broker's software platform, set it to trade for you at the position size etc that you want, and go enjoy your day.
The problem of course comes if things go against you and it starts to lose your money instead of making it. This is always a danger with forex systems and even more when they are trading on autopilot so you may not be aware of what is happening. For that reason it is very important to run the EA on a demo account first until you have absolutely everything clear.
Reviews can certainly help you to narrow down your search when you are looking for a forex robot that will save you tons of time analyzing the market and placing your trades. However, there are two possible problems with reviews. One is that some reviews that you will find online are simply copied from the sales page for the EA itself and the person might not have used the robot at all. In this case you will usually see a very positive review with no indication of the possible downside. On the other hand a review from somebody who has actually used the software themselves can be very valuable because it will often give you hints and tips about how to get the most from it.
The other thing that you may come across is a strongly negative review from somebody who could not make the EA work for them. There may be all kinds of reasons for this which are not the fault of the EA itself. Often, either the person could not figure out how to set it up and became frustrated with it, or they set their risk too high. A common recommendation for risk is 2% per trade. The laws of statistics mean that setting your risk too high will always lead to a busted bank sooner or later, but people who do not realize this will often blame the system that they were using. This can lead to some very vitriolic comments and forum posts and of course it is never recognized that it is the fault of the trader. It must be the system's fault!
What you should be looking for when you search through reviews for the best expert advisors is a general consensus, a balance of views. Rather than simply going by a star system or whether the person liked the EA, check for specific points such as these:
- Is it easy to set up, and how much does that matter to you?
- Is it suitable for somebody at your level? Is it aimed at beginners or experienced traders? Do you need to be taking a certain position size or using a particular broker to use this system?
- Does it suit your trading style in terms of the amount of risk (stop loss settings) and number of trades?
You may need to read between the lines a little bit to work out some of these points. For example, most EAs will claim to work for people at all levels, but a system that only makes a couple of trades a week is not going to make you much money on a micro trading account unless you take huge risks, so that's why the number of trades can be important. However, many people who buy a new forex robot are also trading using other methods and then it does not matter so much if a robot only trades a couple of times a week.
So do check out reviews when you are looking for the best expert advisors, but follow your own agenda when it comes to how seriously you take them.
However, online reviews can be a mixed blessing when it comes to something as important as an expert advisor. In case you do not know, an EA is a forex robot or automated currency trading system that runs on the popular platform known as Metatrader 4. Basically, you hook up the robot to your broker's software platform, set it to trade for you at the position size etc that you want, and go enjoy your day.
The problem of course comes if things go against you and it starts to lose your money instead of making it. This is always a danger with forex systems and even more when they are trading on autopilot so you may not be aware of what is happening. For that reason it is very important to run the EA on a demo account first until you have absolutely everything clear.
Reviews can certainly help you to narrow down your search when you are looking for a forex robot that will save you tons of time analyzing the market and placing your trades. However, there are two possible problems with reviews. One is that some reviews that you will find online are simply copied from the sales page for the EA itself and the person might not have used the robot at all. In this case you will usually see a very positive review with no indication of the possible downside. On the other hand a review from somebody who has actually used the software themselves can be very valuable because it will often give you hints and tips about how to get the most from it.
The other thing that you may come across is a strongly negative review from somebody who could not make the EA work for them. There may be all kinds of reasons for this which are not the fault of the EA itself. Often, either the person could not figure out how to set it up and became frustrated with it, or they set their risk too high. A common recommendation for risk is 2% per trade. The laws of statistics mean that setting your risk too high will always lead to a busted bank sooner or later, but people who do not realize this will often blame the system that they were using. This can lead to some very vitriolic comments and forum posts and of course it is never recognized that it is the fault of the trader. It must be the system's fault!
What you should be looking for when you search through reviews for the best expert advisors is a general consensus, a balance of views. Rather than simply going by a star system or whether the person liked the EA, check for specific points such as these:
- Is it easy to set up, and how much does that matter to you?
- Is it suitable for somebody at your level? Is it aimed at beginners or experienced traders? Do you need to be taking a certain position size or using a particular broker to use this system?
- Does it suit your trading style in terms of the amount of risk (stop loss settings) and number of trades?
You may need to read between the lines a little bit to work out some of these points. For example, most EAs will claim to work for people at all levels, but a system that only makes a couple of trades a week is not going to make you much money on a micro trading account unless you take huge risks, so that's why the number of trades can be important. However, many people who buy a new forex robot are also trading using other methods and then it does not matter so much if a robot only trades a couple of times a week.
So do check out reviews when you are looking for the best expert advisors, but follow your own agenda when it comes to how seriously you take them.
Friday, October 16, 2009
Free Expert Advisors: What to Look For
Free expert advisors for forex trading can be found online if you know where to look. However, before you go ahead and grab one, take a moment to think about what you should be looking for.
Expert advisors or EAs are automated forex trading systems or robots that work on the Metatrader 4 software platform. MT4 itself is free, and as with most software, there are some people who have developed free applications that you can download. They may hope for donations, they may hope for some kind of paid work to come from becoming known for this, or they may just do it for fun. But the question that you must always ask is: what is the system that they have automated?
If you think about it, it is pretty clear that anyone with a profitable forex trading system is not very likely to spend hours of his time creating robot software to run it automatically and then give it away as a free expert advisor. Nor is he going to pay a programmer to create the software and then give it away for free. No, either he will keep his robot for himself or he will hope to make a lot of money by selling it.
This means that the free expert advisors that are available on the internet are not necessarily the best automated forex systems. You might be lucky and find one that is great, but you could spend a lot of time trying out free expert advisors that never make money or do not even work.
Then you have a problem because support is likely to be minimal. How could somebody spend hours of their time helping you to fix any problems that you have, if they are never being paid anything for it? Most people have to earn a living. Maybe they had a few spare hours or days to create the robot in the first place, but that does not mean they have spare time to devote to you and your problems when you try to use it, which could be months or years after they developed it.
Besides this, there may not be much in the way of instructions for setting up. This may not sound like a problem until you try it. Forex robots are notoriously difficult for the non technically minded among us, and if you do not even have much of a manual and nobody to answer your emails, the outlook is bleak.
In fact, free forex robots could end up costing you a lot of time and perhaps also a lot of money, if you are unwise enough to let them loose on your real money account before you have fully tested them. Free expert advisors are not necessarily an unmixed blessing.
Expert advisors or EAs are automated forex trading systems or robots that work on the Metatrader 4 software platform. MT4 itself is free, and as with most software, there are some people who have developed free applications that you can download. They may hope for donations, they may hope for some kind of paid work to come from becoming known for this, or they may just do it for fun. But the question that you must always ask is: what is the system that they have automated?
If you think about it, it is pretty clear that anyone with a profitable forex trading system is not very likely to spend hours of his time creating robot software to run it automatically and then give it away as a free expert advisor. Nor is he going to pay a programmer to create the software and then give it away for free. No, either he will keep his robot for himself or he will hope to make a lot of money by selling it.
This means that the free expert advisors that are available on the internet are not necessarily the best automated forex systems. You might be lucky and find one that is great, but you could spend a lot of time trying out free expert advisors that never make money or do not even work.
Then you have a problem because support is likely to be minimal. How could somebody spend hours of their time helping you to fix any problems that you have, if they are never being paid anything for it? Most people have to earn a living. Maybe they had a few spare hours or days to create the robot in the first place, but that does not mean they have spare time to devote to you and your problems when you try to use it, which could be months or years after they developed it.
Besides this, there may not be much in the way of instructions for setting up. This may not sound like a problem until you try it. Forex robots are notoriously difficult for the non technically minded among us, and if you do not even have much of a manual and nobody to answer your emails, the outlook is bleak.
In fact, free forex robots could end up costing you a lot of time and perhaps also a lot of money, if you are unwise enough to let them loose on your real money account before you have fully tested them. Free expert advisors are not necessarily an unmixed blessing.
Wednesday, October 14, 2009
Forex Tutorial: A Necessity For Beginners
A good forex tutorial is essential for beginners. Despite the advertisements, you cannot expect to set out with no experience or training and start making money right away. If you have some knowledge of stock trading or other similar speculative markets you will have a much shorter learning curve but there are still a few things specific to currency trading that you will need to know.
However, do not lose heart. There are plenty of good forex trading training courses out there and with a little investigation you can find the right one for you. There are just a few things that you need to keep in mind when you are looking.
Cost
While a lot of forex training is available for free simply by reading websites or downloading free ebooks, you are not necessarily going to find the best trading information that way. Most traders do not give away their secrets for free.
So although you may be able to cover the basics from free information, you must expect to pay something if you want to learn from the pros. The cost then can range for a few dollars for an ebook describing a successful trading system, to thousands of dollars to sign up with a mentor for private coaching or attend a series of seminars.
All we will say here is that if you are a complete beginner, it could be a waste of money to pay for top level training even if it is good, because you are probably not ready for it. Cover the basics more cheaply first.
Type of forex tutorial
Many people start with books and ebooks. This can be a great way to educate yourself. There are some differences between the two that you should be aware of. Printed books tend to be more general and more informative about the background and history of currency trading, while ebooks are usually shorter and often cover one particular trading system. You need both background knowledge and a profitable if you are actually going to trade.
Of course, ebooks also have the advantage of being instantly downloadable. Sometimes they will come with a video forex tutorial which can be very valuable indeed. Instead of just reading about the author's trading system you can actually watch as he implements it on his computer. You see exactly where to click and everything is much easier to follow. So if you are considering buying a forex ebook, check to see whether videos are included.
When you buy an ebook you will also usually have a method of getting support from the author or his team. This does not come with a printed book and it is essential if there is something that you do not understand. This can also, occasionally, lead on to a mentoring or other relationship that could be very valuable to you in the future.
So do not be surprised that ebooks are usually more expensive than printed books. They contain a lot of hidden value. What you need when you are starting out with forex trading is a practical forex tutorial, and you are much more likely to get this from a forex ebook with videos than any printed book.
However, do not lose heart. There are plenty of good forex trading training courses out there and with a little investigation you can find the right one for you. There are just a few things that you need to keep in mind when you are looking.
Cost
While a lot of forex training is available for free simply by reading websites or downloading free ebooks, you are not necessarily going to find the best trading information that way. Most traders do not give away their secrets for free.
So although you may be able to cover the basics from free information, you must expect to pay something if you want to learn from the pros. The cost then can range for a few dollars for an ebook describing a successful trading system, to thousands of dollars to sign up with a mentor for private coaching or attend a series of seminars.
All we will say here is that if you are a complete beginner, it could be a waste of money to pay for top level training even if it is good, because you are probably not ready for it. Cover the basics more cheaply first.
Type of forex tutorial
Many people start with books and ebooks. This can be a great way to educate yourself. There are some differences between the two that you should be aware of. Printed books tend to be more general and more informative about the background and history of currency trading, while ebooks are usually shorter and often cover one particular trading system. You need both background knowledge and a profitable if you are actually going to trade.
Of course, ebooks also have the advantage of being instantly downloadable. Sometimes they will come with a video forex tutorial which can be very valuable indeed. Instead of just reading about the author's trading system you can actually watch as he implements it on his computer. You see exactly where to click and everything is much easier to follow. So if you are considering buying a forex ebook, check to see whether videos are included.
When you buy an ebook you will also usually have a method of getting support from the author or his team. This does not come with a printed book and it is essential if there is something that you do not understand. This can also, occasionally, lead on to a mentoring or other relationship that could be very valuable to you in the future.
So do not be surprised that ebooks are usually more expensive than printed books. They contain a lot of hidden value. What you need when you are starting out with forex trading is a practical forex tutorial, and you are much more likely to get this from a forex ebook with videos than any printed book.
Tuesday, October 13, 2009
Forex Trading Platform: Finding the Best One for Your Purposes
Whether you are in the forex market as a broker, a professional trader or a complete beginner, you probably know the importance of having the right forex trading platform. Finding the best one for your purposes is not always easy. Here are some tips to follow.
Broker Forex Trading Platform
Brokers need a solution that is reliable and flexible so that they can adapt it to their particular business. Above all, they want it to be user friendly so that it is easy for their clients to use while providing all the information that clients want at their fingertips.
Most brokers either use custom built software or adapt something that is available out of the box. Custom platforms may seem like the ideal solution for a broker but they are expensive and take a long time. Even if you have delivery of your software, you can be waiting a long time for all of the bugs to be ironed out.
Pre designed forex trading platform packages have several advantages. First, you can be pretty sure they work so you are starting with a system instead of starting from scratch. A huge amount of time can be saved by your programmer, who will just have to change things around so that it does what you want.
Do not neglect the customization, however. It is important that broker trading software is branded to your own company and has a different feel for users than other companies' platforms that they may have used before.
Trader Forex Trading Platform
Traders will usually go with whatever interface their broker provides, but they will be looking for something that is easy to use and provides plenty of technical analysis. The software is often a very important factor in the choice of a broker.
Again, reliability is vital. You do not want to be linked up to a platform that makes errors or is frequently offline. Security is another factor. It is important that your funds are protected and your account cannot be accessed by hackers.
If you are using an automated forex system to trade for you on autopilot, it is essential to check that your selected broker's software will work seamlessly with your robot. If you buy a premade robot or forex expert advisor you will usually receive a list of compatible brokers.
Many successful traders now have someone automate their system so that they can switch over to autopilot trading without changing their trading style. The platform of choice for most robots is Metatrader 4. This is free software on which your programmer can build a trading system for you. It is the most popular forex trading platform for the expert advisors that are sold on the open market and it is compatible with many broker software platforms.
Broker Forex Trading Platform
Brokers need a solution that is reliable and flexible so that they can adapt it to their particular business. Above all, they want it to be user friendly so that it is easy for their clients to use while providing all the information that clients want at their fingertips.
Most brokers either use custom built software or adapt something that is available out of the box. Custom platforms may seem like the ideal solution for a broker but they are expensive and take a long time. Even if you have delivery of your software, you can be waiting a long time for all of the bugs to be ironed out.
Pre designed forex trading platform packages have several advantages. First, you can be pretty sure they work so you are starting with a system instead of starting from scratch. A huge amount of time can be saved by your programmer, who will just have to change things around so that it does what you want.
Do not neglect the customization, however. It is important that broker trading software is branded to your own company and has a different feel for users than other companies' platforms that they may have used before.
Trader Forex Trading Platform
Traders will usually go with whatever interface their broker provides, but they will be looking for something that is easy to use and provides plenty of technical analysis. The software is often a very important factor in the choice of a broker.
Again, reliability is vital. You do not want to be linked up to a platform that makes errors or is frequently offline. Security is another factor. It is important that your funds are protected and your account cannot be accessed by hackers.
If you are using an automated forex system to trade for you on autopilot, it is essential to check that your selected broker's software will work seamlessly with your robot. If you buy a premade robot or forex expert advisor you will usually receive a list of compatible brokers.
Many successful traders now have someone automate their system so that they can switch over to autopilot trading without changing their trading style. The platform of choice for most robots is Metatrader 4. This is free software on which your programmer can build a trading system for you. It is the most popular forex trading platform for the expert advisors that are sold on the open market and it is compatible with many broker software platforms.
Sunday, October 11, 2009
Forex Analysis: Technical or Fundamental?
In any discussion of forex trading you will see discussion of the two main types of forex analysis. These are technical analysis, where trading is based on historical and mathematical factors such as price charts and indicators, and fundamental analysis, where traders pay more attention to economic factors such as financial and political news.
Which one of these will give you more successful forex trading signals? It is a difficult question and the answer is not agreed by all traders. If you look around the internet you will probably find more discussion of technical analysis but that is partly because there is more to get a grip on. Beginners are frequently advised to identify trends on price charts and then trade on the basis of those alone. This is one of the easiest ways to begin forex trading and it can be successful.
Fundamental analysis depends on knowledge and news of the constantly changing real world. This makes it more difficult to take into account if you are not in the habit of checking out the financial section of your newspaper. However, there is no doubt that ultimately it is the economic factors which cause major price movements. Advocates of fundamental analysis will argue that any evidence on charts is historical and not predictive. In other words, the charts tell you what happened 5 minutes ago but not what is coming next.
One thing is for certain. Major financial reports and other events of national or international importance can have a huge and sudden effect on currency prices. So even if you prefer the technical method of forex analysis, it is wise to keep an ear to the ground and avoid being trapped in a bad trade when the US government announces a change in interest rates and the dollar leaps or plummets by 50 pips or more.
It can be helpful to think of price movements in the forex market as having a kind of elasticity. They are constantly stretching out to certain limits and then moving back, not necessarily to their starting point but often less or more. The fundamental factors are what make the prices move but technical analysis can be used to predict how far they are likely to stretch and when they are likely to start to reverse.
So the bottom line is that the best way to profit from forex trading is to make use of the technical tools such as charts and indicators but at the same time, be aware of the fundamental factors that are the real driving force behind any trends. The successful forex trader will be comfortable with both types of forex analysis.
Which one of these will give you more successful forex trading signals? It is a difficult question and the answer is not agreed by all traders. If you look around the internet you will probably find more discussion of technical analysis but that is partly because there is more to get a grip on. Beginners are frequently advised to identify trends on price charts and then trade on the basis of those alone. This is one of the easiest ways to begin forex trading and it can be successful.
Fundamental analysis depends on knowledge and news of the constantly changing real world. This makes it more difficult to take into account if you are not in the habit of checking out the financial section of your newspaper. However, there is no doubt that ultimately it is the economic factors which cause major price movements. Advocates of fundamental analysis will argue that any evidence on charts is historical and not predictive. In other words, the charts tell you what happened 5 minutes ago but not what is coming next.
One thing is for certain. Major financial reports and other events of national or international importance can have a huge and sudden effect on currency prices. So even if you prefer the technical method of forex analysis, it is wise to keep an ear to the ground and avoid being trapped in a bad trade when the US government announces a change in interest rates and the dollar leaps or plummets by 50 pips or more.
It can be helpful to think of price movements in the forex market as having a kind of elasticity. They are constantly stretching out to certain limits and then moving back, not necessarily to their starting point but often less or more. The fundamental factors are what make the prices move but technical analysis can be used to predict how far they are likely to stretch and when they are likely to start to reverse.
So the bottom line is that the best way to profit from forex trading is to make use of the technical tools such as charts and indicators but at the same time, be aware of the fundamental factors that are the real driving force behind any trends. The successful forex trader will be comfortable with both types of forex analysis.
Saturday, October 10, 2009
Candlestick Analysis: Most Popular Trading Chart
Candlestick analysis is one of the simplest and most effective methods of technical analysis for currency trading as well as stock trading. While there are other types of charts available including line and bar charts, the candle patterns are the most popular.
History Of Candlestick Charts
This type of price tracking chart was developed in Japan in the 18th century and that is why you will sometimes see them referred to as Japanese candlestick charts. It also explains why many of the common recognized patterns have Japanese names such as doji and marubozu.
The charts are believed to have been invented or at any rate used by the very successful Japanese commodity trader Mr. Homma who mainly profited from trading in the price of rice. Previously, simple line charts had been used to track commodity closing prices. Candlesticks gave traders a way of plotting more variables while staying within a two dimensional chart.
While bar charts can also plot the open, close, high and low, the advantage of candlesticks is their visual utility. Bullish and bearing periods are clearly visible at a glance.
Mr. Homma's phenomenal success as a trader led other Japanese commodity traders to adopt his analysis tool and in the early 20th century it was introduced to the American stock market by Charles Dow, the founder of the Wall Street Journal and co-founder of the Dow Jones company.
What Is A Candlestick
A typical candlestick has a block that is the body of the candle, plus vertical lines known as shadows or wicks which stick up and down from the body. The top of the upper shadow is the highest price reached during the trading period and the bottom of the lower shadow is the low.
The top and bottom of the candle block mark the opening and closing prices in either order. The candle was originally unshaded (white) for a rising market where the open was the bottom of the candle and the close was the top, or shaded (black or green) for a falling market where the open was the top of the block and the close the bottom. You may now see other colors used, e.g. green or blue for a rising market and red for a fall.
In a case where there is some coinciding of prices and the open, close, high and low are not all different, the candle may look slightly different. Here are some examples:
Doji - period with an equal opening and closing price, looks like a cross.
Marubozu - period when the opening price was the low and the closing price was the high (white marubozu) or vice versa (black marubozu). Has a candle body block only, with no shadow sticks top or bottom.
Candlestick Analysis In Real Time Trading
Candlesticks can record any measured time period. Typically traders will use 5 or 15 minute candles with the resulting chart showing several hours, but it is possible to set your chart for a longer term or shorter term view. Patterns can be identified that indicate emerging trends or possible forthcoming breakouts. You can then compare with indicators or other time periods to check the signals.
Trading decisions in the live market often need to be made very fast. The colored blocks of candlestick analysis help traders to see movements and reversals at a glance and avoid mistakes.
History Of Candlestick Charts
This type of price tracking chart was developed in Japan in the 18th century and that is why you will sometimes see them referred to as Japanese candlestick charts. It also explains why many of the common recognized patterns have Japanese names such as doji and marubozu.
The charts are believed to have been invented or at any rate used by the very successful Japanese commodity trader Mr. Homma who mainly profited from trading in the price of rice. Previously, simple line charts had been used to track commodity closing prices. Candlesticks gave traders a way of plotting more variables while staying within a two dimensional chart.
While bar charts can also plot the open, close, high and low, the advantage of candlesticks is their visual utility. Bullish and bearing periods are clearly visible at a glance.
Mr. Homma's phenomenal success as a trader led other Japanese commodity traders to adopt his analysis tool and in the early 20th century it was introduced to the American stock market by Charles Dow, the founder of the Wall Street Journal and co-founder of the Dow Jones company.
What Is A Candlestick
A typical candlestick has a block that is the body of the candle, plus vertical lines known as shadows or wicks which stick up and down from the body. The top of the upper shadow is the highest price reached during the trading period and the bottom of the lower shadow is the low.
The top and bottom of the candle block mark the opening and closing prices in either order. The candle was originally unshaded (white) for a rising market where the open was the bottom of the candle and the close was the top, or shaded (black or green) for a falling market where the open was the top of the block and the close the bottom. You may now see other colors used, e.g. green or blue for a rising market and red for a fall.
In a case where there is some coinciding of prices and the open, close, high and low are not all different, the candle may look slightly different. Here are some examples:
Doji - period with an equal opening and closing price, looks like a cross.
Marubozu - period when the opening price was the low and the closing price was the high (white marubozu) or vice versa (black marubozu). Has a candle body block only, with no shadow sticks top or bottom.
Candlestick Analysis In Real Time Trading
Candlesticks can record any measured time period. Typically traders will use 5 or 15 minute candles with the resulting chart showing several hours, but it is possible to set your chart for a longer term or shorter term view. Patterns can be identified that indicate emerging trends or possible forthcoming breakouts. You can then compare with indicators or other time periods to check the signals.
Trading decisions in the live market often need to be made very fast. The colored blocks of candlestick analysis help traders to see movements and reversals at a glance and avoid mistakes.
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