Forex scanner is a software that allows Traders watching a large number of assets to trade on, spot attractive trading opportunities and provide signals for any trading strategy. This is not an automated trading system as it does not make trading decisions itself, nor provides trading signals. The main task for a forex scanner is to deliver information about possible profitable deals and tensioner strong friends. A wide variety of trading assets in the financial markets might confuse traders the scope of best currency pairs or stocks or commodities to choose for trading. Forex markets scanners can provide a preliminary analysis to select assets that could bring profit.
What is a forex scanner?
The forex market has dozens of currency pairs to trade on. In most cases, financial markets are calm and quiet. However, trading conditions change rapidly, while trading opportunities can appear at every moment. It is rather hard for a human trader to monitor all of the asset classes available in the foreign exchange market.
Hows does a forex scanner work?
Forex trend scanner is based on monitoring the price change during the day. Once the software finds a currency pair which moves faster compared to others, an alert is brought to a trader. Actually, the algorithm does not provide trading signals, but it only highlights those assets that are the most active in terms of the price action. This information is extremely important for every trader who is interested in picking up the hottest assets to trade on. For example, during an Asian trading session, the Australian dollar gained strength versus the Japanese yen 0.5% or 50 pips, other currency pairs where raining in a tight range of 0.2%. What does this information mean for a trader? It means the trading volume and volatility is higher for the currency pair compared to the general market.
Of course, there have to be fundamental reasons for such overperformance. Regardless of the factors driving the currency pair, it is getting much more attractive to trade rather than watching other assets because strong trends bring more profits. After getting in a lot from the forex trend scanner, Trader opens the chart of the exact pair on a certain timeframe compatible to his own trading strategy and makes the analysis. If the technical sentiment is attractive to enter the market, then the trader makes the appropriate decision whether to buy or sell the pair. If the strong trend continues in the same direction to trade I can benefit from that. So even if the AUD/JPY currency pair wasn't in the watchlist of the trader before, the forex scanner made its job of delivering information about an attractive entry, which gave the profit at the end of the day.
Advantages of forex market scanners in trading
One of the main advantages of the forex market scanners is the speed of information processing. Currency pairs and other assets in the FX market fluctuate every second, and it is extremely hard to monitor the price changes for a human trader. This software does the hard job for the human, spotting the most attractive assets to trade on and notifying the trader. Although the algorithm doesn't provide trading signals, it can point to an asset which deserves traders attention.
Another strength of the forex scanner is adjustability. For example, traders can set fixed timeframes for the software to watch, determine specific chart patterns to pay attention to or adjust the software where to highlight price action applicable for a certain trading strategy. For example, if a trader is keen on using the breakthrough strategy, she would be interested in those currency pairs that are reaching resistance or support level with a high likelihood of breaking it through.
Adjustable forex scanners
The FX market is full of forex scanners free with a large number of different additional settings and features. Adjustable scanners are the most popular among them is this option allows traders to set all the parameters needed for an individual trading strategy. Here is the list of the most powerful settings to improve the efficiency of a forex scanner.
This feature is related to choosing the optimal trading strategy in terms of the time frame. For example, if a trader is keen on making deals on the hourly chart determined time of holding an average trading position and sixth of tips of the stop-loss order, then he wouldn't be interested in highlighting those assets that are attracted to trade the daily timeframe. This is why the ability of the software a fixed timeframe and monitoring all the price action on the exact chart is essential. Such an approach as scalping suggests a large number of entries in the small number of people for every trading position. Short term timeframes write 15 or 5 minutes are the most important charts to watch in this case. If forex scanner is able to focus on those charts only, then the efficiency of the information delivered to a trader will be higher.
Preset chart patterns
Some traders profit trading on exact chart patterns like head-and-shoulders double top or double bottom and so on. Some forex markets scanners are able to focus on preset patterns on price charts of many assets. Once the selected dropdown appears on the graph, the software delivers alert for a trader. Is an additional analysis positive in terms of entering the market, and the pattern is coming in line with the general trend, can the deal might be lucrative. As a result, traders do not need to spend hours to watch dozens of charts to find an exact pattern, they can rely on software to provide the preliminary analysis.
Custom trading strategies
Another powerful option of a forex market scanner is an ability to focus on a particular trading strategy. There are lots of methods on how to trade in a fast-changing market environment. Some traders using the reversal strategy, entering the market when the current trend is getting exhausted and the opposite is likely. Others are keen on following trends, adding positions during corrections. The software can be adjusted to watch the price action and highlight trading conditions correspondent to an individual trading strategy.
Examples of using the forex scanner
Let's consider a real trading situation in the foreign exchange market. Imagine a trader focused on European currency pairs. At some point, during the American trading session open, and important fundamental information regarding Canadian comes in. That was an unexpected announcement from Central Bank officials and the future of interest rates in Canada. As far as the market players did not expect such news, the USD/CAD currency pair start declining sharply. Although this asset was not in the watch list of the trader, forex scanner delivered an alert, offering a brilliant trading opportunity. After the trader opened a particular chart, made an express fundamental and technical analysis and realised that the current trend can continue in the same direction, he opened a short position on USD/CAD. The price action continued, and the pair for another 50 pips South. As a result, the trader got profit thanks to the forex scanner.If you like this article, you might also be interested in this Gross investment
Forex trend scanner indicator is not an automated trading system as it doesn't provide trading signals or decisions of whether to buy or sell the asset. The main advantage of the software is to highlight the most attractive currency pairs, commodities or stocks and deliver an alert for traders to consider. Key strengths of the forex scanner include the ability to monitor a large number of assets, adjustable settings in terms of different trading methods and approaches. Users can select fixed timeframes, pick exact chart patterns or set an individual trading strategy for the software where to deliver efficient and profitable information about the market conditions.