Technical Analysis Summary Tool

Forex Widget: Technical Analysis Summary Tool

The technical analysis summary tool is used to provide traders with technical analysis summary, culminating in a trade recommendation on the buy and sell status of a particular currency pair or asset. The tool is not meant to be used as a blind tool for buying and selling a currency pair, as we shall demonstrate in this article.

 

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Features of the Technical Analysis Summary Tool

The first we will notice is that the tool contains a section where the trader can choose the currency pair to be traded. There are other asset categories such as commodities, stocks and stock indices. However, we will only be concerned with currency pairs since we are forex traders. About 20 forex pairs are listed.

Following on from there, we also have another section on the widget which shows various time frames that are to be analyzed, starting from the 5 minute time frame, fifteen minute time frame, the hourly time frame and ending with the daily time frame. It is up to the trader to select which time frames that technical analysis summary will be provided for.

The final section is the table of technical summary. Various summaries are given depending on the time frame and the trade recommendation for the currency pair. So we can have a neutral bias, a buy or sell, or a strong buy/strong sell. These recommendations are based on an algorithm on which the widget was configured.

How to Use the Technical Analysis Summary Widget

The first step is to select the currency pair(s) for which the trader wants technical analysis summary to be provided. This is done by ticking the checkboxes besides each currency pair. After that, the time frame on which technical analysis summary is to be provided is selected, again by clicking the appropriate checkbox.

This automatically refreshes the page on which the widget is pasted, leaving the summary of technical analysis in tabular form as shown below:

technical tool

Now is the trader expected to simply head over to his trading platform and click the buy or sell button in order to execute a trade based on the recommendations shown above? That would be a mistake!

In order to make the best use of these recommendations as listed in the technical analysis summary, the trader is expected to head over to the charts and search out the technical basis for the recommendation, after which an appropriate entry point should be obtained in order to get the best entry. It is possible to get the trade direction right (based on the summary), and then ruin the trade with a badly placed entry. Long entries should be set as close to the support levels as possible, and short trades placed very close to resistance areas. This prevents massive account drawdowns that could lead to margin calls.

The technical analysis summary widget can also be used by traders to conduct historical studies. If at any point in time there is a trade recommendation, a snapshot of the chart for the currency pair can be taken so that the trader can study the chart for clues as to why the trade recommendation was made in the first place. Once this information is decoded, the trader would have added a nugget of knowledge to his trade arsenal. This can be repeated over different currency pairs and different time charts.

Finally, the fact that the trade recommendations are given for different time charts can also give the trader clues as to when to exit from trades. For instance, if the recommendation for the hourly chart is a BUY, and that for a daily chart is a NEUTRAL call, then this tells the trader that the situation that exists on the hourly chart may not last beyond one day. This will require some fine tuning on the trader’s side to see exactly how this works.

Conclusion

The technical analysis widget is a great tool that traders can use in different ways. Feel free to explore this tool and see how you can use it in the ways we have mentioned above.

Adam

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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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