A Technical Analysis Software to Analyze the Price Charts
Recently I published an article on automated trading software or robots, and explained why you should avoid them. However, there are some technical analysis software that could be a good help for novice traders to learn to analyze the charts and locate the chart patterns and support/resistance lines.
In this article, I am going to talk about the technical analysis software, and at the end of the article I am sharing a kind of technical analysis software that works on MetaTrader 4 or MT4 platform. This software which is usually called Expert Advisor or EA, is able to plot the support and resistance lines on the price charts and is a big help to locate the support/resistance breakouts and also some strong chart patterns like Triangle, Wedge and Flag. I will also share a good and strong trading system that helps you trade the support/resistance breakouts that this EA locates. Before that, let&8217;s see what a technical analysis software is and how it works, and whether you should use it or not.
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Need For Automated Technical Analysis
Computers in today’s era form an integral part of a trader’s paraphernalia and trading software is what gives an edge to trader. From calculating the strong entry-exit points to charting trading patterns, from tracking pip movement to deciding on buy/sell orders, from sifting through continuous inflow of trading data to identifying volume movements, there is just about no aspect of trading that isn’t monitored by software anymore. Software in today’s world is an as indispensable part of trading as the capital required initiating an investment in the markets.
You could well argue with me about the need for an automated tool for technical analysis when traders have manually interpreted trends and given buy or sell signals for years. Well, I would say that given the pace of trading as we see it today, automation is the need of the hour. Automated technical analysis is nothing but making the software read the signals just like a trader, look out for them and interpret them as per data fed in by the trader.
It essentially works towards cutting out the human element from the day to day trading. I would say that for certain points it is actually a good move to cut out the emotional human element from the entire trading scenario. The automated analysis of the technical trends of the market gets you quick response as per pre-decided format and leaves no room for indecision. In a market that thrives on speed and precision, automated analysis cuts out the scope of human error from the trading horizon. Also it adds to the convenience factor, you do not have to keep vigil on the trading screen 24&215;7. The software tracks prices and executes a trade as per pre-fed settings.
I know that those who have been following me on middleground are surprised to hear this from me, because it looks against what I have been saying about trading so far.
You are right, but the above words doesn&8217;t mean I am asking you to leave your trading to a software completely. This is not possible to do with our trading strategy, because it is visual. We have to see the candlesticks patterns, and the trend&8217;s situation to decide whether we can go for the trade setup or not. Some parts of our trading system can be automated, but the last part which is deciding about the quality and strength of the trade setup cannot be programmed and automated.
For example, it is possible to create a software that locates the candlestick patterns we follow. A software can easily locate patterns like Bearish/Bullish Engulfing Patterns, Dark Cloud Cover and Piercing Line. But something that a software cannot determine is the strength of the pattern. Too many patterns form on the charts every day, but the ones that we consider and take are very rare. We take the too strong patterns, and this is what a software is unable to distinguish, because it is something visual. It cannot be done just by measuring the length of the participant candlesticks, because the candlesticks size have to be compared with the previously formed candlesticks, maybe even their combination and arrangement. This is what a software cannot do.
A software can also recognize Bollinger Bands breakout, and even the strength of the breakout, but it takes forever to set it to screen the strong breakouts from the weak ones on different currency pairs and time frames. It will make mistakes and will miss some of the good breakouts and will take some of the bad ones.
In addition to the candlestick pattern and Bollinger Band breakout, we consider the situation of the market where the pattern is formed on. It is important for us to know whether the pattern is formed on a too strong trending market, an exhausted trend, on a sideways market, or somewhere on a consolidation. Even if the candlestick pattern and Bollinger Bands breakout can be programmed to be located by a software, this part of the work has to be done by the traders.
So, automating some part of our trading strategy can be possible, but it doesn&8217;t save any time for us, nor it will help us locate the setups better. The trade setups we want can be located on the charts at a glance. It doesn&8217;t need any analysis, nor it needs any complicated indicators. So we don&8217;t need a software to do it for us.
However, maybe a software can be used to help novice traders learn some part of the work like technical analysis. I see that novice traders have problems in locating the highs and lows and plotting the support and resistance lines properly. A software that shows the most visible highs/lows and plots the support and resistance lines on the charts can be a big help and it saves a lot of time for those who want to learn technical analysis. Indeed, the software I am going to share at the end of this article is such a software. Please keep reading. I will let you know.
Perhaps one of the biggest advantages of introducing technology into the trading is bringing forth the live trading charts right at your fingertips. You are able to avail to access the trading screen at any point of the day at fairly affordable rates, and your trade is no longer dependant on a third person account. This feature again respects and helps realise the time factor effectively. You can access live charts, daily news analysis and other tools that are geared towards maximizing the returns that you can expect to from your investment.
These are perhaps the most important tools for technical analysis of the markets. It works in an automated fashion to identify various price patterns depending on the price action and executes the resultant strategy. The software helps accumulate all historical data and correlates them with the current price action to bring out the trading pattern or a chart movement which will enable you to decide on a strategy that can reap the benefits of a specific trend. This is particularly helpful because sometimes the not so obvious price trends might not be visible to the naked eye and by the time trader might identify it, it could be too late or the entry/exit points might become irrelevant beyond a specific price points. In contrast, there are special software that helps you identify not just trends, but specific moments as well that could turn out to be the point of reversal or turnaround for many a trend.
What is interesting about this software (technical indicators) used for technical analysis is that most time they are very adaptable and easily concurs with the traders specific interests and performs only the select task that a trader might look to achieve. Almost everything from color schemes to parameters responsible for analysis can be modified as per a person’s choice and requirement. If you want, you can even chart different indicators using the same set of values and data points. What this kind of adaptive technology can do is it can help you achieve a lot more precision and perfection in your analysis, something quite unthinkable manually. Not just it gives you easy access to multiple analysis techniques at the same go, it can also work towards cutting down the time taken for these in-depth analysis by giving all the required info in multiple windows at the same time.
Gauging the Market Depth
Another big advantage of using software for technical analysis is that it helps you use data to gauge the depth of existing markets. It gets you a ringside view of the limit orders, liquidity pockets and the easy access points in the market. When you identify the pockets of adequate liquidity, it will enable you to better align your trading positions and garner the maximum possible risk-reward ratio. An understanding of the market depth also helps you gauge the market mood a lot better and the amount of risk that is worth its while.
Another interesting and important feature is the system of alerts that is auto generated as a result of a software interface as compared to a trader spotting sudden patterns manually. You can adapt the software in a way that it helps you set alarms for as many fields as you want and provide the right update at the right alarm. You can set alarm using a variety of options like symbols, price action, news based moves, size of the trade, quotes and the variety of keywords that can be punched in for the desired impact.
Perhaps the most beneficial outcome of this method is easy and quick response to the news and market moves, wherever and however it comes across. Be it the middle of the night and deep into trading day, a news development or a price action would not go unnoticed. Also, it gives you the option to deactivate the alarms that you do not require beyond a point and which might not be relevant after a certain news event. If you had to redraw charts manually based on such events, it could be very time consuming and the accuracy of it could be at a stake. However, a software enables easy changes.
Option To Save Past Records
Availability of records is another big advantage of using software to analyze charts. It helps you save all past work, historic data and outcomes of the strategy that you might have used earlier. This is extremely useful because access to this huge data source helps you refashion your present trade in perspective of past performance and price movement. Also, sometime reference to how you have reacted to a certain change in price in the past can help you modify, or course correct a current strategy and thereby minimizing the scope of error further in your trade.
Also, this kind of record keeping option makes your create your own individual matrix of the hot trades and currency pairs you want to keep a track on. You can create individual checklists and watch lists of the hot stocks and the correlated market movement.
Thus, we can safely conclude that software can be a huge enabler of efficiency in the markets trading. It opens up a gargantuan scope of opportunity and helps you achieve higher rewards on large risks. This would have been otherwise impossible without access to the deep data resource and reference points. It also helps you achieve a higher degree of accuracy in your work and maximize the profit from any given trade.
The conclusion is that we CAN take the advantage of good software(s) to improve our trading as long as it is possible to leave some part of the work to them and it is possible. There is no doubt that there are still a lot of things that have to be done by us, and neither there is a software that can do them, nor it is possible to create a software for them.
A Technical Analysis Software that Helps You Learn to Analyze the Charts
Recently a friend of mine who is a good trader and investor as well as a programmer, contacted and talked about a simple and small expert advisor that analyses the price charts and locates the support and resistance lines.
As you may know, &8220;expert advisor&8221; or EA is a plug-in software that can be installed on MetaTrader 4 or MT4 platform. Some traders call it robot. Programmers who know the MQ4 programming language, can develop different types of EAs or robots with different abilities and tasks. For example, there are some EAs that are able to close the positions at any given price. They can be used to hide the stop loss and target values from the brokers. Some robots are auto-trader. They can take and close positions based on the special algorithm (trading system) that the programmer has programmed in them. There are many of them being sold over the Internet. No need to say that none of them has been able to make money for the traders in long term, and so I don&8217;t recommend you to try them.
The EA that my friend has developed is not an auto-trading robot and it doesn&8217;t take any positions, otherwise I would not share it on the site. It is just an educational software that helps you see the most visible highs and lows, and plot the proper support and resistance lines based on these highs and lows. This is the summery of what it does:
1. It plots the support and resistance lines on the charts, and on any time frame that you want. It has three different settings that enable you to make the robot plot the lines based on the stronger or weaker highs/lows (different settings of the robot will be explained later in this article). When you want to have more trade setups, you set the robot to use weaker and closer highs/lows to plot the support/resistance lines. Surely, more trade setups based on the weaker highs/lows means a higher number of false breakouts, and so a lower success rate. If you want to have stronger and more reliable trade setups, then you can change the robot settings to choose the stronger and more visible highs/lows to plot the support/resistance lines.
2. It displays an alert window and plays a sound whenever a support/resistance line is tested, broken, and retested. Therefore, you will be notified when you are not at the computer.
3. It emails you whenever a support/resistance line is tested, broken, and retested. You can receive the emails in your mobile and go to check the charts.
Why Should You Use This EA?
1. This EA is a great help for those who want to learn the technical analysis. Novice traders have a lot of problems in locating the valid lows/highs to plot the support/resistance lines. They usually plot the lines wrongly and so they get trapped by the false breakouts. This EA plots the lines on the charts automatically and shows you how to choose the proper highs and lows. It also shows you the chart patterns like Triangles, Wedges, Flags, Channels and&8230; that are usually hard to be distinguished on the charts by novice traders.
2. This EA is also a good help for the professional traders to locate the breakouts on unlimited number of currency pairs and time frames. It can inform the traders about the strong breakouts on time and when it is the right time to enter the market. We show you how to locate the too strong trade setups based on the support/resistance breakout and Slow MACD.
How To Install the EA on MT4
1. Click Here to give us your email to send you the EA file.
2. Copy the EA to the &8220;experts&8221; folder. To do that:
- Click on &8220;File&8221; menu at the top left of your MT4 platform.
- Click on &8220;Open Data Folder&8221;.
- Open the &8220;MQL4&8221; folder.
- Open the &8220;Experts&8221; folder.
- Copy and paste the EA to &8220;Experts&8221; folder.
3. Restart the MT4 platform.
4. Open a price chart.
5. Press Ctrl+N to open the navigator.
6. Open the &8220;Experts Advisors&8221; dropdown.
7. Drag middleground and drop it on the chart.
8. The EA settings window will be opened. Choose the &8220;Common&8221; tab and check &8220;Enable alerts&8221; and &8220;Allow live trading&8221; and choose &8220;Long & Short&8221;.
9. Click on OK.
10. Make sure the &8220;AutoTrading&8221; switch on the standard toolbar is ON.
How to Change the EA Settings
Double click on the EA icon at the top right of the price chart and choose the &8220;Inputs&8221; tab.
- When set to 1, the EA uses the most recent, weaker and smaller highs/lows to plots the support/resistance lines. This setting is good for those who want to have too many trade setups. However, it will have a higher number of false setups too, and so it is not recommended to use it.
- When set to 3, the EA uses the strongest and most visible and reliable highs/lows to plot the support/resistance lines. This setting is for the more patient traders who like to wait for the strongest trade setups. It will have a lower number but stronger and more reliable trade setups.
- Setting 2 is between 1 and 3.
It is recommended to follow the markets through the 2 and 3 settings, because the robot is able to locate nice and strong trade setups with these two settings.
- When set to 1, it plots the lines based on the close price (line chart).
- When set to 2, it plots the lines based on the high and low prices (candlesticks or bars shadows).
It is recommended to set it to 2 which is the default setting.
When you change this setting, you will have to delete the lines that are already plotted on the charts, after clicking on the OK button, otherwise the EA will not update the lines.
- True: The EA displays the alert window and plays a sound whenever price tests, breaks out of and retests the support/resistance lines.
- False: The EA doesn&8217;t display the alert window and play the sound alert.
- True: The EA sends an email whenever price tests, breaks out of and retests the support/resistance lines.
- False: The EA doesn&8217;t send any email at all.
- True: The EA displays the alert window and plays a sound whenever price tests the support/resistance lines (of course if Display_Alert is set to true).
- False: The EA doesn&8217;t display the alert window and play the sound alert when price tests the support/resistance lines.
- True: The EA emails when price tests the support/resistance lines (of course if Send_Email_Alert is set to true).
- False: The EA doesn&8217;t email when price tests the support/resistance lines.
- True: The EA displays the alert window and plays a sound whenever price breaks out of the support/resistance lines (of course if Display_Alert is set to true).
- False: The EA doesn&8217;t display the alert window and play the sound alert when price breaks out of the support/resistance lines.
- True: The EA emails when price breaks out of the support/resistance lines (of course if Send_Email_Alert is set to true).
- False: The EA doesn&8217;t email when price breaks out of the support/resistance lines.
- True: The EA displays the alert window and plays a sound whenever price retests the support/resistance lines (of course if Display_Alert is set to true).
- False: The EA doesn&8217;t display the alert window and play the sound alert when price retests the support/resistance lines.
- True: The EA emails when price retests the support/resistance lines (of course if Send_Email_Alert is set to true).
- False: The EA doesn&8217;t email when price retests the support/resistance lines.
SupportColor: Support line color.
SupportWidth: Support line width.
ResistanceColor: Resistance line color.
ResistanceWidth: Resistance line width.
Do_Not_Change: Do not change this, otherwise the EA will not work.
- Click on OK after modifying the settings.
- You can click on Reset to go back to the default settings if you want.
- This EA doesn&8217;t plot any line and update the previously plotted lines when the markets are closed. It means if you add it to the charts during the weekends, it will not work until the market open.
How to Trade Using Our Technical Analysis EA
This EA shows you how to analyze the charts plots the support and resistance lines. At the same time, it can also monitor as many currency pairs and time frames as you want, 24 hours per day. It informs you whenever a trade setup (support/resistance breakout) forms.
Note: Please do not trade this EA&8217;s signals on your live account before you learn how it works.
To have a confirmation for the trade setups that our EA locates, please add MACD to your charts with the below settings:
Fast EMA: 24
Slow EMA: 52
MACD SMA: 14
This settings makes MACD much slower and so it filters out so many false signals.
Then set the &8220;Support_Resistance_Strength&8221; to 3, so that the EA plots the lines on the strongest possible high and lows. This will also filter out so many false breakouts. Then you can right click on the chart and click on &8220;Template&8221; and then &8220;Save Template&8230;&8221;. Give the template a name and save it. Next time that you open another price chart, all you have to do is that you load the template on the chart, so that the EA and MACD will be added to the newly opened chart all at once with the settings described above, and you will not have to add and set them one by one.
After adding the EA and MACD, your chart should look like this:
Long Trade Setup:
You will have a long trade setup if the price breaks above a resistance line while MACD bars are ascending. As simple as that:
When a candlestick closes above a resistance line, the EA will inform you, so that you can go long. See where to set the stop loss:
Short Trade Setup:
You will have a short trade setup if the price breaks below a support line while MACD bars are descending. As simple as that:
When a candlestick closes below a support line, the EA will inform you, so that you can go short. See where to set the stop loss:
You can set a 3xSL target at least.
You can monitors the markets both with 2 and 3 settings for Support_Resistance_Strength. The robot is able to locate strong and profitable trade setups through these two settings.
We will have more articles about the forming and formed trade setups located and followed by our technical analysis software, to help you learn how to use the software and trade its trade setups.
How to Monitor Too Many Price Charts at the Same Time
To monitor several charts, you can have them open on your platform, load the template on each, and leave them open until the robot alerts you. Loading too many charts on one platform can overload the platform, and so it can be ended to platform shut down. If you want the robot to monitor too many charts at the same time, you can run multiple instances of MT4 on your computer and have a few or few charts on each. Doing so, the platforms will not be overloaded and they will not get shut down.