Today I wanted to go over a common question I get asked at the website and that relates to what type of charts should one use when trading Price Action. I recently covered the answer to this in a previous weekly review as well here. In summary to that question, the answer is, you want to be using New York Daily Close Candle Charts. In this review I will go over the importance of why and compare the differences.
What Does This Mean?
What this means essentially is that you want to see your daily candle close at the end of the New York session, basically put see the daily candles close at 5 pm New York time. This is very important for traders that use price action as candle closes in general are a important focus in price action trading. Also this means that you want to see 5 Daily candles on your chart for each trading week as well, each candle representing each days complete daily session of market moves.
Above – Example of a Good Chart with New York Daily Candle Close.
Before I go any further on this topic now, you should stop and see if your chart offers 5 candles per week and each one closes at the end of the New York session. This means by the way the daily candles closing at the beginning of the Australian and New Zealand session for those that live in Australia.
Above – An example of 5 Daily Candles per week on a Forex Chart showing pointed out Monday.
A Couple of Examples of Recommended Brokers That Use New York Daily Close Candles:
ICMarkets – Click Here ( highly recommended broker )
Hotforex – Click Here
*Both brokers above you can open up a free demo account to test out the charts if you want to compare.
Okay, so now that you have done this and have confirmed your charts, let’s quickly go over the importance. First point I will make is if your candle closes are not New York Daily Candle close charts that they will look different.. In some instances this can be very costly for a trader that is making decisions based of candle patterns. Not to mention as well, it essentially means a trader is not seeing the full picture of the market which is important in all forms of trading.
Above – Comparing two different candle close charts, the one on the left not being New York Daily close charts so candles look different and a Tuesday candle has not even formed yet ( over 6 hours since the chart on right has ) . Chart on the right is an example of the recommended New York Daily Close Chart.
Now that I have summed up the negative aspect of not using these types of charts, let’s go over the benefits of New York Daily Close charts.
Benefits of Using New York Daily Close Charts
Each daily candle is summing up the days moves and ending after the most busy trading session of the day ( the New York Session). This means you are getting the best view of the market for Monday candle, Tuesday Candle, Wednesday Candle, Thursday Candle and the Friday Candle summing up the end of the weeks move. This bigger view means better understanding of future moves and also most importantly following the bigger Price Action Traders as well. An important aspect for a number of reasons including probability.
And considering the most successful traders out there are Price Action traders other than banks you want to be trading with what they see, am I right..?
In summary if your charts have 6 candles or are not looking the similar to mine such as shown in my Weekly Forex Outlook and Reviews then most likely your brokers gmt offset is not right and you want to take action to fix. Remember the most important and powerful tool in Forex or in any trading overall is the Chart..