In order for you to trade Forex, you will need to use a Forex broker. Provided that there are dozens of brokers from which to choose, which one is the best for you? This is an important question as many brokers will offer different spreads, fees ,and charts.
For the purpose of this article, I will focus on the charts and why they are the important component when choosing a broker. The charts represent the daily price action and, depending on the broker you use, the price action could look different. Considering our trading method revolves around trading price action, working with charts that have the wrong server time is a sure way to receive misleading information, as server times will reflect on the shapes of the candles. New York close charts in essence, close their daily candles on GMT+3 (the time where important banks and institutions close in North America). In other words, these charts are the same charts that the agents of the Fed are watching.
Let me explain further why you need New York close charts….
We all know that the agents of the Fed are the ones primarily responsible for moving the markets. They conduct their business transaction during normal working hours and watch the screens to find value for the clients and push the market when they see weakness. When these large players hit the markets, they watch the screens to determine the psychology of the buyers and sellers based on technical analysis and price action.
Being able to read the language of the markets all starts with having the right charts. Non-GMT+3 charts simply won’t be able to provide you with an accurate picture of the proper communication in the markets.
In my opinion, non-New York charts were invented by some brokers to make you lose money, as it will provide misleading price action clues, causing you to place bad trades that end up getting you stopped out.
Here is the evidence that you need to see
If the above is not enough proof enough, let me further explain that some brokers use six candles instead of five. However, banks and institutions are open Monday through Friday, making the sixth candle yet another misrepresentation of the market. Depending on the broker, candles will be printed at different times which will affect the shape of the candles.
As we mentioned several times in our free e-book about the language of the markets, depending on the shape of the candles we will categorize each of them differently, as these candles form “letters” in the Forex alphabet. This is crucial information as the close of the daily candles provide is with important information as to who “won” in the market. Oftentimes, the market moves heavily during the last few minutes as traders jump into the markets right before it closes. If the market closes on either a high or a low note, this will affect the sentiment of the traders worldwide. The market close describes if the bulls or the bears won the fight, and this information is available to anyone with access to the proper charts.
What we really need are the five-day New York Close charts; these represent what is reallyhappening in the markets and only with these can we properly see the same charts that the agents of the Fed are watching. Here is an example of two different Forex brokers with different server times. This first broker is a six-day non-New York Close. I have circled the sixth Sunday trading bar that shows erroneous price action signals and which is, therefore, totally unnecessary.
In the next chart we examine another broker who uses five candles; however, this broker’s server time is in sync with the New York Close (GMT +3). This chart was taken at the same time as the one above. The difference is that you can see that this one printed a pin bar while the one above did not. One could have easily missed out on a good trade setup in the first one. The chart below is of the same type that the agents see and use every day. If you are seeing what they see, trade opportunities become much more apparent.
These two charts show us the same currency pair on the same time frame at the same day of the year, however they show us totally different price action. With the first, a trader can miss out on excellent trading opportunities.