Charts for Trading the Financial Markets
A day trader is someone who trades in a very short time frame. Usually the trader would open and close trades on the same day. If a day trader speculates on the markets using financial spread betting, they will also not have to pay finance charges as long as they close all their trades before the end of day.
A swing trader, on the other hand, believes that the market follows certain identifiable ‘swings’ and that if you enter a trade at the start of a new swing you can profit from this. Swing traders usually trade within a time frame of several weeks.
Long-term traders trade within a time frame of months or even years. Long-term traders will often use fundamental indicators rather than technical indicators to guide their trading activities.
Because the times frames with day trading are much shorter than with other types of trading, a trader may rely on charting software that displays short-term charts, for example 1-hour charts, 30-minute charts and even 1-minute charts.
The technical indicators used by day traders may not differ much from those used by swing traders. Both groups often use technical indicators to help them with their trading decisions, although many swing traders also look at fundamental indicators such as interest rates and employment figures.
Some of the charts used by day traders include line charts, bar charts and candlesticks. A line chart provides only end-of-period data, e.g. the price at the end of every minute, hour or day.
A bar chart gives you the opening, minimum, maximum and closing prices of the time frame in question. A candlestick chart provides the same information as a bar chart, but in a format that is felt by many to be easier to read.
A whole new field of study has developed around the interpretation of candlestick chart patterns. Concepts such as the ‘morning star’ and ‘evening star’ are widely used by those who believe that future price movements can be predicted by studying historic candlestick patterns.
Candlestick charts originated in Japen, where they were originally used to predict movements in the price of rice.
Spread betting companies like Financial Spreads and ETX Capital will provide their clients with Candlestick charts.
Ichimoku Kinko Hyo is a charting system that was also developed in Japan during the last century. It consists of price charts plus a combination of other technical indicators. There are many professional traders in Japan who rigorously follow the predictions of the Ichimoku.
Spread betting is a geared form of investment, it involves a high degree of risk to your funds and can result in losses that exceed your investment. Ensure that it matches your trading requirements as it might not be appropriate for all investors.
Make sure that you familiarise yourself with all the risks involved. Only spread bet with money that you can afford to lose. Where you feel it is appropriate request independent advice.
Robert Thomas is a seasoned spread betting professional who offers both strategic views and tactical analysis on the stocks and shares, commodities and forex markets.
Processing your request, Please wait....
