Technical Analysis Software Do You Really Need It?

By: Matthew John

As a trader, you can use technical analysis software to predict the market movement by utilizing its charting, analysis, and reporting features. If you have tried forex trading for a while and learn to do it in the hard way, I think you have experienced the confusing moment of analyzing charts, prices and volume data just to decide a good entry price.

Using a technical analysis software can tremendously help you to make the very best entry and exit decisions. The functions of this software may vary from the one which only help you in specific area to the one that will automate all the process for you. These are several 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 reveals price, volume, and technical analysis indicator like 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. Viewing historical data on a specific period of time is also possible; you just input the date range that you want.

2. Back Testing

Back testing is used when you are testing various trading strategies or systems. You just simply apply the strategies to a certain time period from the historical data and see how it performs against the market movement during that time.

While this method is good to a certain degree, rely on it too much have caused the fall of many traders. This is because they tested their strategies with historical data and keep modified it so it can be a profitable strategy in that time period. Most of the time, these tester will forget to test their modified strategy in current market condition. This is very fatal; it is useless to have a strategy that worked in 1997 but fail at the current market.

If you have tested your strategy against historical data and it score good winning trades, create a demo account and test it again in the current market condition; If it still works and building steady profits in at least two months, you already have a strategy that works.

3. Alerts

Forex traders use 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 deliver 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 also make it easy to trade since you can just make an entry 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 do not want to depend on somebody else for that, this software is invaluable.

Article Source: http://yourfinance.co.za

About The Author
Chart is the core of a technical analysis software. Find out how to utilize it on forex live chart. Don't forget that you can also make use of forex signal service for entry point suggestion.