Using the wrong Forex chart can cost you money. Most traders are not aware that there can be a chart “tax” associated with using different charts at the same time. This post will show you how it works and why you may not even be aware that you are paying it.
The “tax” that I'm talking about is not a tax that is imposed by any government or your Forex broker. It is actually self-imposed by individual traders.
Luckily, if you are aware of this, you can also eliminate it altogether. Let me show you specific examples of how you might be taxing yourself unnecessarily.
The Cause of Forex Chart Tax
The bottom line is that if you use Forex charts on several different devices and charting platforms, there can be differences between them that can add up to a lot of lost profits, over time. If you take signals on one platform, but exit on another, you may not realize your mistake.
I will show you examples from three platforms that I use personally, Trade Interceptor, Metatrader 4 and Oanda FxTrade. There are three basic variations of the chart tax. You may be paying for one or all of them, so be sure to review them carefully.
The charts you use might have significantly different quotes. Here is one example from Trade Interceptor and Metatrader 4.
When I took this screenshot it was after the New York close, so the difference was only half a pip. But during more active times, this difference can be a lot more. Be sure that there aren't big differences between the platforms that you are using and monitor them during both active and quiet periods.
Another way that the quotes can vary between platforms is if one uses the bid and one uses the ask price. This is rare, but it can happen. Again, during high volatility periods, the spread can be huge.
Different Market Open Times
You also want to check to see when the day starts on your charts. Different open times can result in completely different looking charts. When you right-click on a Trade Interceptor screen, you can easily adjust the times from a drop-down menu.
Find out the open time that your broker uses. Then compare the charts to see that they display the same information.
Different Indicator Settings or Calculations
Finally, if you use indicators, be sure to check that your indicators display the same values across all the platforms that you use. There can be several reasons why your indicators might give you different readings.
The price data could be different, the formula for the indicator could be different or they could be set to different default settings. So be sure to double check your indicator values before you place any more trades.
If you really care about eliminating this chart tax from your trading, then your assignment is to go back through your trading journal or account statement right now.
Yes right now, before you forget.
Think about how you actually entered and exited each trade. Write down some notes on each trade.
Then go back to the chart for each trade where you entered and exited on two different platforms and find out if your exit was less than optimal. For this exercise, do not worry about the entry.
Only compare the exit signal from the platform that you used to enter the trade to the exit signal that you used to exit the trade. Find out how much the alternate chart cost you.
You might even find that exiting on another platform was more profitable. Do not jump to conclusions, be sure to check several winning and losing trades. The difference can go against you for losing trades.