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There are hundreds of different ways to trade the Forex market. You can trade the daily charts, the 1 minute charts or anything in between. You can use fancy indicators or trade simple price action using key levels of support and resistance.
The list goes on and on, however there is one variable that can benefit you regardless of how you choose to trade the market…
Using New York close charts.
It can mean the difference between seeing a favorable price action setup versus a price structure that has no real significance. It will also make your life much easier when it comes to drawing key support and resistance levels.
By the end of this article you will have a solid understanding of what a “New York close chart” is and why it is so important. I will also share with you a few of the Forex brokers that offer this type of chart.
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Believe it or not, most Forex brokers do not offer suitable charts to trade from. If you are serious about making it as a Forex trader, understanding what I’m about to share with you is crucial.
There are two main types of charts, or feeds that are available in the Forex market. The first is a GMT close. This is the most common type of chart and is available at just about every major Forex broker in existence.
The second, less common type of chart is the New York close. As you can tell by the name, these charts use the New York close (5pm EST). Although this is the preferred chart for professional traders, the fact is that not every Forex broker offers it.
This makes it an important question that needs to be asked while performing your research on which broker to go with.
First things first, if you are trading from the more common GMT close, it does not mean that you can’t succeed as a Forex trader. I am in no way insinuating that you cannot become a successful Forex trader if you trade from charts that close at midnight.
What I am saying is that a New York close will give you a clean chart to trade from, making it easier to identify key levels and valid price action setups.
How do I know?
I know because I spent the first few years trading Forex from charts that use a GMT close. As soon as I switched over to a New York close, I found it much easier to identify the technical patterns that were unfolding.
If you stop and think about it, using a chart that closes at the same time of day that the market opens makes perfect sense…
As you know, the Forex market opens the week at 5pm EST and closes the week at 5pm EST. Therefore it makes sense to have a chart where each session closes at the same time. This gives you five, 24 hour periods to work with.
The alternative (GMT close charts) will give you what are commonly referred to as “Sunday bars”. These are the candles that form during the short period of time each Sunday, and because the market is not very active during this time, you get extremely small candles that clutter your chart.
The comparison below illustrates this point.
Notice how the GMT close chart on the left has Sunday bars, which are the sessions that occur between the 5pm EST open and the GMT close.
In contrast, the New York close chart on the right has five equal trading sessions each week, making it much easier to read the raw price action.
Ask any professional Forex trader and they will tell you that having five equal sessions each week is an essential part of being able to “read” the price action that unfolds.
Of course the final decision is yours, but having traded from GMT close charts for years before making the switch, I can tell you that there is no way I would ever go back.
If you want to become a consistently profitable Forex trader, it’s imperative that you establish a strong foundation. The very first step in building that foundation is to use clean, simple charts. Having five equal sessions to trade from will give you just that.
The easiest way to tell what type of chart you have is to simply watch where each session closes. If it closes at a time other than 5pm EST, you are not using New York close charts and may need to give your broker a call.
Need a broker that offers New York close charts?
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Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He's been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students.Read more...
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