Free Forex Charts

There are many free forex charts available through brokers or charting services, enabling the foreign exchange trader to compare different indicators on which to base his trades. One of these indicators is known as the Parabolic Stop and Reverse which when applied correctly can help you with your swing trading decisions. Free forex charts are available from many spread betting companies, foreign exchange brokers or currency exchange brokers.

This indicator was developed by J. Welles Wilder Jr better known as just plain Welles Wilder who is a well known technical analyst. ‘Parabolic’ is a reference to the mathematical shape of the parabola which is like a cone with a rounded tip. It is not necessary to understand the calculations that produce this, since you can see the result clearly in your free forex charts package.

This is fortunate because they are too complex to do easily by hand. For tips about technical analysis using free forex charts click on this link: Forex Chart: Technical Analysis where you will be taken to a page within the Great Forex World web site under the technical analysis category.

Free Forex Charts: Stop and Reverse

SAR stands for Stop And Reversal. As you might expect, this relates to the moment when a price stops moving in one direction and reverses to move the other way. Clearly it is very useful to know when this is about to happen so that you can close out successful trades at the peak of their profits. This is what the Parabolic Stop and Reverse on free forex charts aims to tell you.

So you would not normally use it to signal the beginning of a trend. You would consult other indicators for the best moment to open your trade, and then use the Parabolic SAR to indicate the best moment to close it.

The indicator appears as a series of dots above or below the  of current prices shown on my free forex charts. Usually it is used in conjunction with a candlestick chart, so you will see the dots below the candles during an upward trend and above the candles during a downward trend.

If you have an open trade following a trend into profit and you are watching for the best moment to close it, you will be waiting for the dots to cross the line of candles. This is the indication that the trend is beginning to reverse and you should exit the market swiftly.

The image you see on the right was taken from a free forex charts package by the spread betting company I use but I also get free forex charts from my currency broker too.

Free Forex Charts: Parabolic SAR

Alternatively you can use the Parabolic SAR to place stops, especially if you use the trailing stop. You simply set your stop at the point indicated by the current dot. When the trend is strong, this will be a long way from the current price so your stop will not easily be triggered. As the trend slows, the dots approach the current price, tightening up the gap.

When a reversal is indicated the stop will be triggered by just a small movement. When the Parabolic SAR is accurate this pattern can bring you greater profits than simply setting your stop at a constant distance from the current price. Parabolic charts can be turned off in your free forex charts package to give a clearer view which is what I do then I turn them on again and watch the direction of the trade develop.

This is not a tool for scalpers. It is not so useful for short term fluctuations in a choppy market. The indicator is most reliable over real trends lasting several hours or days. If your system is based around this type of trend trading, you will find the Parabolic Stop and Reverse a useful tool to maximize your profits with free forex charts.

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