One of the main question a trader asks every day is should I be buying or selling? There is a very clear answer to this question…trade in the direction your anchor chart suggests. This blog post will discuss
- What is an anchor chart
- Why you need to use anchor charts
- What anchor charts you should use
What is an anchor chart
An anchor chart is simply using a higher time frame to asses the overall trend of the market. This allows you to keep an eye on the bigger picture. So if your anchor chart is blue, you will be looking on the smaller time frame for buy signals. If your anchor chart is red then you will be looking for sell signals. So if you are trading a 5 minute time frame you may want to use the 60 minute chart as an anchor chart to increase the profitability of your trades.
Personally I use two trading Indicators for my anchor chart, the Trend indicator and the VMA indicator. If these two indicators match then I am very confident I know exactly what direction I should be trading in. From experience I have found you get the best possible trades when the two indicators match. The profitability of my trades is not as high when the two indicators conflict. That is why I recommend using both.
Why you need to use an anchor chart
We have all heard the saying the trend is your friend. Well using anchor charts ensure you are trading with the trend. Trading with anchor charts immediately ensures you are taking the trades with the highest probability of success. If you are currently not using anchor charts then you will immediately enhance your profitability by using them.
What anchor chart should I use
That depends on what time frame you are using. At a basic level you go up a time frame to see the overall market trend.
If your using small time frames (ie 5 and 15 minute) then I would be using a 60 minute time frame.
If you are using medium time frames (ie 30 minute and 60) I would be using the the 4 hour and Daily chart.
If you are using higher time frames (ie daily) Then I would be using the weekly chart.
If you want to ensure you consistently profit from trading it is essential you use anchor charts. Using the VMA and Trend Indicator give you an incredibly clear picture of which direction you should be trading.
As a special offer for anyone who purchases the VMA indicator we are giving away the trend indicator free. Contact us for more details.