Technical Analysis Software – Do You Really Need It?
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. Thus, it is a tool to fulfill the first iron rule of forex trading: never execute an order without proper analysis; read the rest of it at forex trading tips. 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. You can select a time frame to display based on your preferred analysis strategies.
When selecting a time frame, you can choose from tick (seconds), minutes, daily, weekly, to monthly. You can also select a time range by date and access to certain historical data with varying time frame. Learn more about using chart at forex live chart.
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.
While this method is good to a certain degree, rely on it too much have caused the fall of many traders. 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. These traders usually forget to test the strategy against current market movement. 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. You can even create a new indicator that meets your need.
5. Broker Interface
There is technical analysis software that can be integrated to a brokerage platform so you can still trading with a familiar user interface. This will makes your trading process easier because you can input orders directly from the chart.
Using technical analysis software can greatly help you to analyze the market, make entry and exit decisions, and predict future market movement. If you enjoy analyzing market and don’t want to depend on somebody else for that, this software is a must have. Find out more about the best software, system, signals, etc at best trading system.