Winning Strategies With Forex Charts

Winning Strategies With Forex Charts
As you read forex charts, remember that the​ two fundamental approaches for​ online forex trading: fundamental analysis and​ technical analysis.
Fundamental analysis doesn’t rely on forex charts .​
It scrutinizes political and​ economic indicators to​ determine trades .​
Charts here are deployed as​ used as​ a​ secondary reference.
Technical analysis on the​ other hand, attempts to​ predict price swings by analysis of​ historical price activity .​
Those who use technical analysis study the​ relationship between price and​ time.
The most actively traded pair of​ currencies is​ the​ Euro and​ the​ US dollar, so we will use them in​ our example .​
The dollar is​ on the​ right hand side of​ the​ chart and​ the​ Euro is​ on the​ left hand side .​
The currencies are expressed in​ relationship to​ each other in​ pairing .​
Forex charges will always display how much of​ the​ currency on the​ right hand side is​ necessary to​ buy a​ unit of​ the​ currency on the​ left side .​
Looking at​ the​ typical EU-USD, chart you will notice the​ last price displayed per given date .​
This number is​ always emphasized .​
The time is​ tabbed horizontally across the​ bottom of​ a​ chart and​ the​ price scale is​ displayed vertically along the​ right hand edge of​ the​ chart .​
The time and​ the​ price are set in​ all caps to​ help the​ trader remember that technical analysis rests upon the​ relationship between time and​ price.
The trader observes the​ price and​ time movement on a​ chart .​
These include bars, lines, point and​ figure, and​ Japanese candle sticks-- the​ most favored method .​
With the​ candlestick method there is​ a​ large, red section that is​ the​ body of​ the​ candlestick .​
Lines protrude from the​ top and​ bottom and​ they are the​ upper and​ lower wicks .​
When you look at​ all the​ candles on a​ chart it​ is​ apparent that bodies come by difference sizes .​
Sometimes no body exists at​ all.
The same is​ true with wicks .​
Candle wicks come by many difference sizes; there may be no wick at​ all .​
The length of​ the​ body and​ the​ length of​ the​ wick are determined by the​ price range for​ the​ candle .​
Longer candles will have had more price movement during the​ time that they were open .​
The top of​ a​ candle wick is​ the​ highest price for​ that currency while the​ wick’s bottom is​ the​ lowest price .​
a​ currency is​ bullish when the​ close of​ the​ candle is​ higher than the​ open .​
In simple terms this means that there were more buyers than there were sales during the​ opening time period .​
Sometimes the​ candles will not have wicks .​
The price opened and​ it​ dropped off until it​ closed.
Forex charts don’t offer bullet proof trading hints, but they can help a​ trader .​
Past trends do have their place in​ forex trading as​ most traders will admit, and​ using the​ charts to​ track historical trends can assist a​ trader in​ making a​ snap decision.
The online investor typically joins a​ service that provides realtime charts that updates on currency activity .​
Charts can be checked on a​ minute to​ minute basis .​
For those who primarily do their trading based on historical accuracy this can ease the​ burden of​ prediction.
Most forex traders however use a​ combination of​ fundamental and​ technical analysis .​
They may chart historical trends, but they will also pay close attention to​ political, cultural and​ economic indicators within a​ region .​
They might use charts and​ other techniques to​ check correlation between political climate and​ currency fluctuations .​
But even the​ most sophisticated technical analysis software or​ tool has its limitations .​
a​ trader must be prepared to​ take risks… and​ invest money that is​ not needed for​ the​ immediate future.

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