If you are serious about forex trading, then you should go through this article very carefully as we are going to discuss a very important, often overlooked, point pertaining to trading. As you know the charts are the basis for any kind of technical analysis in the forex trading, so even a minor flaw in the information offered by the charts could ruin the entire analysis.
There are some brokers whose charts offer six daily candles per week (the sixth one is an unnecessary 5-hour Sunday candle) instead of the standard charts comprising of 5 daily candles a week (based on the New York closing). For example, look at the following EUR/USD chart; the sixth candle (Sunday bar) is highlighted by an arrow.
The sixth (Sunday) candle could have a major impact on the formation of the Monday candle. For instance, have a look at the following NZD/USD chart;
You can clearly observe that due to the unnecessary Sunday candle, the 6-day chart could not generate the bearish pin bar reversal candle unlike the New York close based 5-day chart. This is the reason why seasoned traders always use and recommend the New York 5-Day Forex Charts.
We all know that the naked price movement and formation of candles are the basis for price action trading which is believed to be the most successful and widely used trading mechanism, so it becomes very crucial to have access to the accurate and reliable data. In addition to the candlestick pattern, the 6-day chart can also cause miscalculation of Fibonacci levels, moving averages or swing levels. The non-standard chart can prove even more disastrous if a trader makes use of scalping, hedging or some other high risk strategies because the loss, due to inaccurate analysis, will be far higher as compared to the intraday or small scale trading.
Many traders and institutions nowadays are automating their trading strategies. Keeping in view the recent advancement in technology, it is believed that after 5-10 years a pretty high percentage of the forex transactions will be executed by the robots. Charts are the primary source of information for robots and Expert Advisors (EAs), hence the undesirable consequences or losses due to the usage of 6-day nonstandard charts may be even higher in the automated trading because the robots don’t have ability to analyze or think; they just implement the predefined strategies.
Unfortunately there is no way to transform the 6-day chart to the standard 5-day chart so you will need to join a broker which offers 5-day New York close charts. There are only a few brokers in the forex industry that offer the standard charting package based on the New York close, so while opening a trading account it is always recommended to make sure that the broker offers the desirable charts besides some other features such as exact execution, minimum slippage, low spreads, reasonable leverage, low commissions and all the major assets for trading.