THE most important thing to appreciate about charts is that they don’t bite. Any initial fear can be overcome with just a couple of hours of practice. However, this does need to be done in conjunction with watching a few educational videos first. Many basic videos are available online, but it is best to check out the educational material available from the provider you are using, since each charting package tends to be unique. For example, at my firm we have comprehensive help videos that go through all the features of the charting package starting with the very basic setting and drawing functionality to the more advanced alerting and back-testing.
When starting out with charts for the first time, it really helps to know your trading strategy. This will assist you in knowing what timeframe you need to be setting your charts at and which indicators are the best to use. For example, for trades over the medium to long term you need to be considering four-hour or daily time periods, whereas medium term you should look at one-hour or 30-minute periods. Anything short term – so for intraday trading, for instance – you need 15 or 10-minute intervals or even less.
Our charts are constantly evolving and when we receive feedback on them from clients we move fast to act. For example, only recently people had requested the ability to draw point-to-point lines and within a few weeks we developed the functionality and had the new feature released.
However, above all you should keep things simple at the start. The last thing you need is a chart that is overloaded with lines, Fibonacci fans, retracements, arcs, parabolics, Bollingers and numerous indicators as it can lead to serious confusion and indecision.
Angus Campbell is head of market analysis at Capital Spreads. Our brilliant trading conference Active Trader – at which Campbell will speak – is on 24 May 2012: www.cityamactivetrader.com