How To Start Trading The Forex Market? Part6

Start Trading The Forex Market? Part 6 - HOW TO READ FOREX PRICE CHART? , Forex Price Chart, what does it mean and HOW to use it? , Many important facts like discipline, trading rules, not greed etc, but one of the most important ones is:

How To Start Trading The Forex Market? Part 6

How To Start Trading The Forex Market? Part 6

LEARN to read charts because they represent the lifeblood of the market.

I admit that reading charts, and interpreting patterns, is more of an art than a skill. Base and apply your entry and exit decisions on YOUR OWN combined method of technical and fundamental analysis.

FOREX charts, easier to interpret and use. They reflect a country's economy which moves more slowly and steadily, compared to the stock market, with the daily drama of corporate reports, Wall Street Analysts, and shareholder demands.

Unlike stocks, currency charts do not spend much time in trading ranges and have a tendency to develop strong trends. Furthermore, Forex with its 4 major currencies is easier to analyze than tens of thousands of stocks.

(Main currencies are: USD/JPY, EUR/USD, GBP/USD and USD/CHF)

The free FREE live charting software, with cutting-edge technology provided by , will really suffice for you to analyze and watch any of the currency pairs. Understanding just a few basic points about technical analysis of currency charts can lead to increased profit potential.

Price - Prices reflect perceptions and actions taken by market participants. It is the transactions between buyers and sellers in the Over-The-Counter (OTC) or "interbank" market that creates price movements. Therefore, all fundamental factors are quickly discounted in price. By studying price charts, you indirectly see the fundamentals and psychology of the market at once, once all markets are fed by two emotions - Greed and Fear - and once you understand them, then you begin to understand market psychology and how it relates to chart patterns.

Data Window Chart – FCM and most online charting stations, when you click on a price bar or candlestick, it will display a small box of data which is usually called a display window which will contain the following items:

H = Highest Price

L = Lowest Price

O = Opening Price

C = Closing Price (or Last Price)

The most common types of price bars, used in FOREX trading, are Bar Charts and Candlestick charts:

Bar chart -

Price bars are a linear (line) representation of a time period. This allows the viewer to see a graphical representation that summarizes the activity of a particular time frame. For example, I use 10 minutes, 60 minutes and daily time intervals for my system. Each bar has similar characteristics and tells the viewer some important information.

First, the highest point of the bar represents the highest price reached during that time period. The lowest point of the bar represents the lowest price during the same period. A regular bar displays a small dot on the left side of the bar representing the period's opening price and a small dot on the right side representing the period's closing price.

Candlesticks - Japanese candlesticks, or Candlesticks as they are now known, were used to represent the same information as Price bars. The only difference is the difference between the opening and closing of the box body which is displayed with the color inside. The red color means the close was lower than the open, and the blue color indicates that the close was higher than the open.

If the box has a line going up from the box it represents the height and is called the axis. If the box has a line going down from the box, it represents the low and is called the tail.

Many interpretations can be made of this "candlestick" and many books have been written on the art of interpreting this rod.

Chart Intervals & Timeframes:

The Time Period & Scale chart, or time frame, basically refers to the duration of time that elapses between the OPEN and CLOSE of a bar or candlestick.

For example, with your broker's software, you will be able to view currency pairs, in a 1 hour time frame over a 2 day period, a 5 day period, a 10 day period, a 20 day period and a 30 day period. Point.

Mostly short-term time intervals (5-minute and 1-minute charts) are used for entry and exit points and long-term time intervals (1-hour and daily charts) are used to see where the general trend is.

That's How To Start Trading The Forex Market? Part 6


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