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IS THIS THE FUTURE OF CANDLESTICK CHARTS AND CAN YOU MAKE MONEY USING THEM?

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Reading a chart is one of the first things that people learn when they first start trading. I often realise how much traders take for granted when I show a friend or family member a candlestick chart of something like oil. All the different colours and blocks can seem meaningless initially until you explain that each candlestick represents all the action within a certain time period.

Unlike line charts, which are usually just based on the closing value, candlestick charts display so much more. In one bar you can see the high, low, open and close of a particular period of time.
Candlestick charts only really started to make an appearance in the 1990s as traders such as Steve Nison highlighted their benefits after extensive research in Japan. Candlestick charts are now de rigueur, but like all innovations, it doesn’t take long for the status quo to become upset when a new method appears on the horizon.

Pip Range Bar Charts:
Traditional candlesticks are time-based, which means that each bar represents a set segment of time. On a page you might have one days action with each candlestick representing the high, low, open and close of every five minutes. The longer term trader might look at a chart with each candlestick representing 4 hours worth of action. The candlestick could be length if there was a lot of action in that period of time, or small if the price didn’t move much. Importantly the next candlestick wouldn’t form until the time was up.

But why do we construct charts based on time? Why should each bar represent 5 minutes action? Why not have each bar represent a certain number of pips and only move on to the next one when that pip limit has been reached? This is the question Trading FX asked and their innovative pip range bar charts are the answer.
Unlike traditional time-based charting, each bar represents action, not time. They have a variety of options available, but I’ll use the 8 pip range bar chart for the moment.

On the 8 pip range bar chart, each bar has a maximum range of 8 pips. Once the price has moved 8 pips, a new bar will form. If you have a fast moving market, you might get new bars forming every few seconds as the market moves 8 pips very quickly. In a slow moving market, it might take several minutes for the market to move 8 pips and therefore form a new bar.

The whole TradingFX.com service is more than just the pip range bar charts though. TFX is a trading community which uses the charts as its centre point, but there other things you can benefit from as part of your membership.

The moderators help you understand the suggested TFX trading strategies as well as outlining reasons for and against various trades. There is a nice community feel to TFX with moderators being patient with new members and existing members helping each other out. Members can have full access the Pip Range bar charts on their personal PCs to do a variety of technical studies and unique display configurations. At the same time they can also access the trading rooms to discuss trades with the team, interact with the moderators, take classes and share ideas.

Overall, there’s a lot to like about TFX. The moderators are extremely helpful and patient with group numbers small enough to warrant individual attention. The pip range bar charts are a fantastic innovation, I found them to be a very useful tool, as did other traders in the room.

Overall, I like what TFX have done and there’s clearly a lot of time and effort put into the new charting. TFX have something different here and I hope it goes from strength to strength.

Contact Details:
http://www.TradingFX.com
http://www.youtube.com/user/TradingFXcom

Reprinted from:
What Really Profits?
Canonbury Publishing Ltd.
An Independent Review of Trading Systems, Stock Market Tipsters & Investment Strategies
March 2009 Issue

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