Repainting is a term that is commonly used in forex market charting. It refers to the phenomenon where a chart indicator changes its value based on new data, which causes the indicator to “repaint” previous data points. This can make it difficult for traders to accurately interpret the historical data on a chart.
To understand repainting, it’s important to first understand how chart indicators work. Indicators are mathematical formulas that are applied to price data to generate a visual representation of market trends. These can include moving averages, oscillators, and other technical analysis tools.
When an indicator is plotted on a chart, it is typically calculated based on the available price data at that time. For example, a moving average will take the average of the last 50 or 200 price points, depending on the specific settings used. As new price data becomes available, the indicator will recalculate and adjust its value accordingly.
The problem with repainting occurs when an indicator is recalculated based on new data, but this new data is not included in the historical data points that the indicator was originally based on. This can cause the indicator to “repaint” its previous values, making it appear as though the indicator was giving a different signal at that time.
For example, let’s say that a trader is using a moving average to identify trends in the market. The moving average is based on the last 50 price points, and the trader notices that the moving average has crossed above the current price. This is typically seen as a bullish signal, indicating that the market is likely to continue rising.
However, if the indicator is repainting, it may change its value as new price data becomes available. If the moving average is recalculated based on the last 100 price points, for example, it may now show that the moving average is actually below the current price. This would be interpreted as a bearish signal, even though the trader originally saw a bullish signal.
Repainting can be a major problem for traders, as it can lead to false signals and inaccurate interpretations of market data. It can also make it difficult to backtest trading strategies, as the historical data may no longer accurately reflect the signals that were given at that time.
One way to avoid repainting is to use non-repainting indicators. These indicators are designed to only use the available data at that time, and will not change their values based on future price data. This can help traders to accurately interpret historical data and avoid false signals.
Another way to avoid repainting is to use multiple indicators to confirm signals. By using multiple indicators, traders can reduce the likelihood of false signals and increase their confidence in their trading decisions.
In conclusion, repainting is a term that refers to the phenomenon where a chart indicator changes its value based on new data, which causes the indicator to “repaint” previous data points. This can make it difficult for traders to accurately interpret historical data on a chart. To avoid repainting, traders can use non-repainting indicators or multiple indicators to confirm signals.
