The kind of charts you use to trade matters a lot, especially when you trade raw price action with candlesticks. Even though forex charts from different brokers may look similar, a keen observation would show you that not all the charts are the same. There would be a slight difference in prices which wouldn’t be very relevant because of the liquidity providers. The topic on discussion today is the type of chart offered by your broker. There are only two types of brokers according to charts; New York close and GMT close forex charts.
When new traders and sometimes even experienced traders find out that two or more broker candlestick formations are not completely alike, they tend to fall on statements like “my broker is a scam, a market maker or a manipulator.” Sadly, most of such claims are made from sheer ignorance.
A little bit of research would render those claims as false; but unfortunately many traders do not arm themselves with the complete knowledge before they go live. I have been there before myself; we are quick to blame the broker on things we have little or no idea on.
The Difference between New York close and GMT close forex charts.
The only difference between these two categories of brokers is fully evident on the charts they provide. You only need to see the candlestick chart of your broker on the daily timeframe to see the kind of charts they offer. There is also another simpler way to see the difference and I will go into detail below.
New York close forex charts.
Brokers do not necessarily have to be in the United States to have access to New York close charts. When you pull up the chart for your favorite currency pair, go to the daily timeframe. Locate some candlesticks for Mondays, start counting from Mondays to Fridays. If you get five candlesticks to represent each trading day of the week, then your broker offers NY close charts. Daily candlestick for NY close charts end at 9/10 pm GMT which is equivalent to the time the trading day comes to an end in New York.
GMT close forex charts.
Most of the brokers who offer GMT close charts are based in the United Kingdom. When you pull up a daily chart of a GMT close broker and start counting from Mondays to Fridays, you would get five trading days alright. The headache comes when you see very small candlesticks in between every five trading days. For this type of broker, six candles make a week. Daily candlestick for GMT close charts end at 12/1 am GMT.
The market is open to retail trading 24/5 but it opens on the latter part of Sundays. Those small candlesticks you get to see on GMT close forex charts represents Sundays.
A simple way to differentiate between New York close and GMT close forex charts.
When you pull up your chart on Metatrader 4/5, go to properties and turn on the period separator. On the one-hour timeframe the period separator divides the charts into days using vertical dotted lines. With NY close charts, all the period separators would be created equally.
With GMT close charts close brokers, there would be slim vertical margins after every Monday to Friday. Those slim vertical margins represent the trading that went on for the little part of Sunday.
Does it matter the kind of chart your broker provides?
When analyzing on the daily timeframe, those little Sunday candlesticks can be a slight hindrance in finding the exact market swing points to plot horizontal support and resistance levels. The Sunday candlesticks are useless and might create a little bit of confusion.
When you time 4-hour candlestick breakouts of levels like I do, you dare not do that with a GMT close broker. Why? Because you will be at a risk of entering many false break outs. That doesn’t sound like good news to your trading capital.
Because of the different closing times between New York close brokers and GMT close brokers, some of the 4-hour candlesticks form differently. When new and ignorant experienced traders see the difference without understanding, they tend to fall back on the “scam” claims.
If you’re that candlestick pro who can add two or more candles to get a resulting one, the difference in candlesticks wouldn’t be a problem to you. But hey! Isn’t actual trading too much work already?
Which type of forex chart would I recommend?
Evidenced from what I have said so far, I recommend NY close forex charts over GMT forex close charts. Another reason I prefer NY close over GMT close is that New York is considered as the financial capital of the world. It houses the famous Wall Street where a lot of trading money exchanges hands. Regardless of that fact, London is also considered as a financial capital but New York leads.
If you trade with a good GMT close broker and are very okay with their trading conditions but have a problem with the charts they offer, it is not a problem at all. You can use the tradingview platform as a filter.
It is a great platform for just analysis but to execute trades, you need your trading platform. Tradingview makes use of New York close forex charts and their charts are known to be universal.
I hope you enjoyed this lesson and learned something beneficial to your trading knowledge. Comments and questions are very welcome in the comment box below.