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Technical Analysis

Technical Analysis Software

Technical analysis software used to just refer to programs that charted market action and allowed traders and technical analysts to draw trend lines and superimpose technical indicators. Recently, however, the forex software world has been transformed by the development of automated forex trading software, trade signal generators and other sophisticated computer-assisted algorithms for analyzing exchange rate movements.

This article describes some of the basic types of technical analysis software and what benefits each of them offer to the technical forex trader.

Forex Broker Reviews

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Bloombex

Forexyard

eToro

Charting Technical Analysis Software

Perhaps the most important technical analysis software for the do-it-yourself technical analyst will be the forex charting software. The program will need to provide real-time exchange rates for each of the currency pairs you want to analyze and probably also needs features like the following:

Plot different chart types include bar and candlestick charts.
View rates on charts and indicators by putting your cursor over them.
Periodicities including hourly, daily and weekly data.
Ability to plot trend lines, flat lines and channels over rates.
Permit user to notate charts.
Includes a variety of popular technical indicators.
Allows for charts and chart templates to be saved for later use.

Pattern-Matching Technical Analysis Software

This relatively-recent type of technical analysis software uses advanced pattern-matching algorithms to identify traditional and reliable chart patterns. Some programs even indicate how certain they are about the pattern, as well as what its trigger points and objectives. Other programs focus on implementing specific charting techniques like Elliott Wave Theory.

Trade Signal Generating Software

Now available from a variety of commercial vendors, forex trade signal generating technical analysis software has become increasingly popular of late. Although the software generally falls short of actually executing the deals it recommends for you, it usually provides an audible signal along with a trade recommendation including information like:

Which currency pair to deal,
In what direction to take the trade
Where to liquidate the position at a profit, and
Where to close the trade out at a loss if the market takes a turn for the worse.

Automated Trading Technical Analysis Software

Perhaps bored with looking at trading screens, or disappointed in the profitability of their own trade plans, some traders now choose to use commercial forex robot software to perform their trading thanks to the recent rise of online automated forex trading. Basically, you can now purchase an off-the-shelf automatic forex trading robot that comes complete with a built-in expert trade plan that can often be tailored to suit your risk tolerance.

Alternatively, you can have your own software written around a trade plan you have personally developed and implemented for you with a supportive forex broker. Furthermore, if you want to write your own automated forex technical analysis trading software, then you will first want to set up an account with a forex broker that supports this feature.

In addition, you will need appropriate programming skills, as well as advanced charting software that will allow you to back-test your trading plan over historical data. You can usually then trade your plan in a demonstration account for a reasonable test period before going live on your funded account.

» Useful Chart Patterns