Wednesday, May 10, 2006

Forex Candles

Lately i sterted to wounder, candles where made for stock market which is open only 8 hours a day, so every daily candle on stock market has it's own meaning it is seperated timeframe, on the other hand Forex is never close (except weekends) so what is the value of Forex daily candle?

My doubts became even bigger when i found out that Steve Nison (world class candlesticks expert) has a seminar on diffrences between Forex and Stock Market candles, so there must be something on it.

Anyway I am not Steve Nison but here is my take on it.

1. Diffrent people can have diffrent candles on their monitors, for example when i see doji, someone on the other side of the globe can see "hammer" or any other candle, why? Anserw is simple no one can tell you when one day on forex market has passed, it can be diffrent hour in Europe, diffrent in America and diffrent in Asia, more over traders in one country can have diffrent candle patterns on their charts, it is very subjective, everything comes down to defined hour of the day when new candle is open.
On the other hand there isn't such problem on the Stock Market everyone has got the same daily candle.

2. I said it before but i will reapeat it here, Forex market do not close, actually it do not have such a thing a session (unless you threat time from monday to friday as a session). On Stock Market yesterday candle has got nothing common with todays candle, hard to belive it but this is the way it is and that is why there are so many gaps on stocks charts, don't get me wrong i am not saying that trend do not exists i'm just saying that daily candles on Stock Market are "self dependent", unlike Forex candles they are almost always close to each other, one cadle close price is next candle open price, it is very common you have to agree.

3. As for gaps, you will hardly see them on Forex, but sometimes they occur, espacially after weekend it looks like "something" had to happen to move open price far away from last close price, on Stock Market it happens daily on Forex weekly, in fact it can be even monthly.

These are my thoughts, but i have got one question for you. What is the point in using candles on 5M charts? They can't even make a simple formation, even if they do it is pointless to use it You proboably saw 5 or more doji in a row on charts less then 5M is there any interpretation for this, each of them means trend reversal? I do not think so.

5 comments:

Unknown said...

I am a trader of Trae12 having high security level. The security of their clients’ funds is their top priority. With this broker, one can be absolutely assured that his deposits are secured in every possible way. The Company maintains operational and client bank accounts with reputable international banking institutions. They also take no set up fees from their traders. So I obviously trust my broker. They also have high leverage up to 1:400 and low spread in most of their pairs. They take no set up fees that’s why a trader can enjoy his exact profit.

Unknown said...

For forex trading you should try TryMarkets. Because, only they can give you smoothness in your daily deals of business transaction. You can get the efficiency of this liquid market what facilitates your trading with ease. This broker giving the tight spreads, fast execution and high leverage facility. Their providing leverage is up to 1:500. They do not have interventions of no dealing desk. They also have STP/DMA execution mode.

Unknown said...

Much thankfulness to you for this enchanting writhing. I would expect more articles from you. I do love Options trading. I slant toward lxmarkets as one of the best options broker and i trade with them and never at whatever point found any issues with the trading and in like way withdrawal. I see that its shocking broker. I am light to trade with such a standard broker with vivacious payout.

Unknown said...

Forex is like a big opportunity to the new generation. It’s really easy to learn Forex. But we should be meticulous. We can take a good concept about market by seeing at the candles at a glance if we have proper knowledge. Trade12 having a smooth platform where candles are nicely adorned. So I have been trading with this broker for a long time.

Unknown said...

Saar Pilosof
Very nice informative blog... All points made by author are very important to select right Forex trading broker. Many of us mainly focus on only one aspect that is low commission and spreads and is a big mistake. Thanks for making all valuable points here.