| Learning the basic skills in forex, such
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| | price of EURUSD may be 1.2055 bid and
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| as how to read forex charts, is really
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| | 1.2058 ask (or offer). When you buy, you
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| important.
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| | buy at the ask, which is the higher of
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| This is because once you have this vital
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| | the 2 prices in the spread, and when you
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| skill under your belt, it will be a lot
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| | sell, you sell at the bid, which is the
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| easier and quicker when the time comes
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| | lower of the two prices.
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| for you to learn and practice an actual
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| | If you use the chart price to determine
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| forex trading system.
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| | an entry or exit, realise that when you
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| By the time you finish this article,
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| | place an order to sell when the chart
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| you'll learn how to read forex charts, as
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| | price is say 1.330, then this is the
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| well as know the pitfalls that can occur
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| | price that you'll sell at assuming no
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| when reading them, especially if you
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| | slippage.
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| haven't traded forex before.
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| | If on the other hand, you place an order
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| Firstly, let's revise the basics of a
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| | to buy when the chart price is the same
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| forex trading as this relates directly to
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| | price, then you'll actually buy at
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| how to reade forex charts.
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| | 1.3333. A forex system will often
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| Each currency pair is always quoted in
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| | determine whether your orders will be
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| the same way. For example, the EURUSD
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| | placed simply according to the chart
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| currency pair is always as EURUSD, with
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| | price or whether you need to add a buffer
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| the EUR being the base currency, and the
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| | when buying or selling.
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| USD being the terms currency, not the
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| | Also note that on many platforms, when
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| other way round with the USD first.
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| | you're placing stop orders (to buy if the
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| Therefore if the chart of the EURUSD
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| | price rises above a certain price, or
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| shows that the current price is
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| | sell when the price falls below a certain
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| fluctuating around 1.2155, this means
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| | price) you can select either "stop if
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| that 1 EURO will buy around 1.2155 US
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| | bid" or "stop if offered".
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| dollars.
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| | 4. Realise that the times shown on the
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| And your trade size (face value) is the
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| | bottom of forex charts are set to the
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| amount of base currency that you're
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| | particular time zone that the forex
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| trading. In this example, if you want to
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| | provider's charts are set to, be it GMT,
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| buy 100 000 EURUSD, you're buying 100 000
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| | New York time, or other time zones.
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| EUROs.
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| | It's handy to have a world clock
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| Now let's have a look at the 5 important
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| | available on your computer desktop in
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| steps on how to read a forex chart:
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| | order to convert the different time
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| 1. If you buy the currency pair, that is,
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| | zones. This is important when you're
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| you're long the position, realise that
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| | trading major economic announcements.
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| you're looking for the chart of that
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| | You'll need to convert the time of an
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| currency pair to go up, to make a profit
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| | announcement to your local time, and the
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| on the trade. That is, you want the base
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| | chart time, so you'll know when the
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| currency to strengthen against the terms
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| | announcement is going to happen, and
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| currency.
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| | therefore when you need to trade.
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| On the other hand if you sell the
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| | 5. Finally, check whether the times on
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| currency pair to short the position, then
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| | your forex charts corresponds to when the
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| you're looking for the chart of that
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| | candle opens or when the candle closes.
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| currency pair to go down, to make a
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| | Your charting software may be different
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| profit. That is, you want the base
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| | to someone else's in this way.
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| currency to weaken against the terms
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| | The reason I mention this, is that if you
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| currency.
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| | need to trade major economic
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| Pretty simple so far.
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| | announcements, either by entering a trade
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| 2. Always check the time frame displayed.
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| | based on the movements that happen after
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| Many trading systems will use multiple
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| | the announcement, or to exit a trade
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| time frames to determine the entry of a
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| | before the announcement in avoid getting
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| trade. For example, a system may use a 4
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| | stopped out during it, then you need to
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| hour and a 30 minute chart to determine
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| | be precise (to the minute!) as these
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| the overall trend of the currency pair by
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| | trades are performed according to what
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| using indicators such as MACD, momentum,
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| | happens at the 1 minute immediately after
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| or support and resistance lines, and then
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| | the announcement, not the candle
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| a 5 minute chart to look for a rise from
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| | afterwards!
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| a temporary dip to determine the actual
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| | So there you have it.
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| entry.
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| | You now have the 5 essential keys to how
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| So ensure that the chart you're looking
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| | to properly read forex charts, which will
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| at has the correct time frame for your
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| | help you to avoid the common mistakes
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| analysis. The best way to do this is to
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| | which many forex beginners make when
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| set up your charts with the correct time
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| | looking at charts, and which will speed
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| frames and indicators on them for the
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| | up your progress when you're looking at
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| system you're trading, and to save and
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| | forex charting packages, and forex
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| reuse this layout.
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| | trading systems that you want to trade!
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| 3. On most forex charts, it is the BID
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| | Now that you know this, practice looking
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| price rather than the ask price that's
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| | at forex charts with each of these 5
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| displayed on the chart. Remember that a
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| | points in mind.
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| price is always quoted with a bid and an
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| | So get to it!
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| ask (or offer). For example, the current
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|
