Learning how to read Forex charts is one of the first basic skills that you have to master if you are intending to go into Forex trading. Once you have a thorough grasp of this skill, you will find other areas to be less demanding. As you make your first attempts in the industry, it would be of great advantage if you already know how to handle Forex charts.

Forex trading uses currency pairs. This specific pair maintains the same “pairing” in every transaction. One example is the EURUSD with the EURO and the US dollar as the currency pair. The first part of the notation, the EUR is the base currency and the second part, the USD as the terms currency. The positions can never be interchanged. If you mean that 1 EURO can purchase about 1.2065 US dollars, then the Forex chart would show EURUSD = 1.2065.

Trade size is another term that you must be familiar with. Trade size also means your face value. When you want to buy 100,000 EURUSD, you will say that you are buying 100,000 EUROS. From this example, it is clear that trade size means the amount of base currency that you are willing to trade.

How does the currency pair help you identify the best chance to earn more profit? A currency pair that goes up means the base is stronger. At this time, you have a higher chance of earning profits. On the other hand, a currency pair that goes down means that the terms currency is stronger. It is the best time to sell.

Time frames are also important to you as a Forex trader. You cannot place the correct analysis of the information at hand if you do not have the correct time. To ensure availability of current time, it is best if you could have your own charts. It would also help if you have these charts saved for future use.

You should also be aware that it is the bid price and not the ask price that is shown in most Forex charts. The ask price is used when you buy while the bid price is used when you sell. This is one important consideration that you have to bear in mind.

Time zones can create confusion when trading. The time shown in the chart is the time zone of your Forex provider. To avoid confusion, you should use the world clock in your computer. This will make it handy for you to convert different time zones to your own time. Without this tool, you will not have real time with respect to important announcements made. This could result to losing your investment.

Still with respect to time, see to it that the time in your Forex chart is synchronized with the time candle. Also, make sure that you have the right charting software to give you the correct time data.

There are more to learn about Forex charts. If you would really want to succeed in Forex trading, you have all the reason to explore the other important aspects of this volatile yet financially rewarding business.

Related Blogs

Tagged with:

Filed under: Learn Forex

Like this post? Subscribe to my RSS feed and get loads more!