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Forex Charts Forex Charts is one of the tools available to forex traders that will make life very comfortable for them. In the long run, a forex trader will survive only on the basis of his understanding of the Forex Charts. Unlike Stock Markets and other trading markets, forex trading cannot rely completely on news, articles, earning reports and other stimuli. Please note that forex trading is done on the currency of a nation. The price of the currency fluctuates due to a lot of reasons that would be unseen to you. In such a case, Forex charts provide statistical information and other socio-political events related to a particular currency.

How do Forex Charts help in forex trading?

It is said in the trading circles that your stay in the Forex Markets would be long if you understand the Forex Charts. The Forex Charts will give you insights on the fundamentals impacting a currency. For example, if you would be dealing the currency pair of GBP (Great Britain Pounds) and JPY (Japanese Yen), you would need to know the fundamentals behind both the currencies. The Forex Charts for this currency pair will tell you the ties between the two countries, the macro-economic policies between the two nations and other fundamental factors impacting the price of the currency.

Ideally, you look at the fundamentals and you start analyzing. When you analyze a set of results given to you, it could go either way. This is where a new investor gains with experience. A new trader will not be able to pin down the move in currency when he is new to the market.

Read the Forex Charts with accuracy

If you are able to read the forex charts, make sense out of it and act in the markets accordingly, you have won half the battle. Typically, in forex trading reading the forex charts is the first step for you to understand the forex signals.

Here’s how you read a Forex Chart that has a total of 300 periods in all :

• Read the hourly forex charts. The hourly charts have a breakup of forex prices across 12 days. This will give you a fantastic sense of the long term fluctuations in the market. Understand the support and resistance levels for the currency from these charts. For example, If the trade opens at 2.5 JPY, see if the support and resistance levels are within 2% of the opening value.
• Read the 15-minute chart to understand the current trends. By reading this chart, you would also be able to understand the current price in relation to the long term moving average of prices.

How do the Forex charts force your trading activity?

The Forex Charts would tell you if the currency is expecting to go downward based on its fundamentals. This could also tell you if you would be investing with the trend or against the trend. There are many permutations to be considered during Forex Trading. You would take the 5-minute and the 15-minute chart and compare it with the 60-day moving average to give you statistical inputs.

Get accustomed to the different permutations of a currency. With time, you will be able to associate an indicator from the forex charts to your trading in the forex market. When you are new, take some time to get used to the market with different packages.

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