With just a basic understanding of how to perform technical analysis, the beginning FOREX trader can jump from trading a mini account right into the big leagues in no time at all; it isn't all that difficult to do, once you understand the basics. Initially it can seem like all of the acronyms and charts are extremely confusing, and can easily scare away the novice trader, but it's not really so difficult to understand as it may appear. Here are the three most popular FOREX charts available and how to read them.
Line Charts
A line chart is one that even non-FOREX traders have seen before. This chart plots each day's closing price, then connects all of the points with a line, which creates an uneven line with ups and downs as you move from left to right. It's easy to identify the main trend of a currency pair by following the path of this line, as it goes up, down or remains flat.
Bar Charts
A bar chart is really no different from a line chart, but it shows the opening price for each day as well as the closing price, along with the high price and the low price the currency traded at during the day. Start with a vertical line, placing the upper point of the line at the high price for that day, and the lowest point showing the low price the currency traded at that day. This vertical line then includes a small horizontal line sticking out to the left, showing the opening price, and then another horizontal line sticking out to the right, which shows the closing price that day. This type of FOREX chart is highly useful, because you can easily see the longer term trend of any currency pair, and at the same time you see the daily fluctuation in the currency.
Bar charts are often referred to as "OHLC" charts, which stands for Open, High, Low, and Close.
Candlestick Charts
Candlestick charts have become the most popular kind of FOREX chart that FOREX professionals consult. The candlestick has the best features of the line chart and bar chart, and on top of that adds an interesting twist. A candlestick indicator shows a vertical line like a bar chart, but rather than have small horizontal lines to indicate the daily opening and closing prices, it shows a rectangular box that sits right on top of the vertical line. Inside the box is a color: usually white or light color to show that the price closed above its opening price, and black or a darker color to show that the price closed below its opening price.
While a candlestick chart does not have any additional information beyond that in a bar chart, it is much easier to read at a glance because you can see up trends or down trends quickly by the color indicators. Recognizing a market reversal becomes simpler too than with a bar chart.
Since candlestick charts are probably the most popular of all of the FOREX charts, you'll be able to find much more information online about how to use them and read them, including how to identify candlestick patterns. Candlestick patterns have been adjusted many times, and are extremely helpful in seeing emerging trends within a currency or stock. It's a good idea to become more familiar with the better known candlestick patterns if you would like to achieve higher profits in FOREX trading.
Quick Forex Tip #1
Forex trading is the largest known financial market. Day or night, it doesn’t really matter; the trade goes on even as half of the world is asleep. It offers a lot of opportunities for many organizations and individuals to make profit. There are many day traders in the market, and if you think you can do it, why not join the day traders. |
Quick Forex Tip #2
Don’t let your emotions rule you, especially when you're making trading decisions. A successful Forex trader should always be disciplined, and once you attain your objective, leave the market. Many times, people plunge in deeper because they are influenced by greed and fear. Don't be like them. |
Quick Forex Tip #3
Getting a good education about Forex trading will also let you increase your chances of profiting and decrease the risks involved. In getting the proper education in Forex trading, you will also learn how to read Forex charts. Forex charts are one of the most important things you should learn in order to successfully trade in the Forex market. Without this knowledge, you are doomed to fail in this very liquid market. |
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