How to Read and Use a Forex Chart

Author: Erica Locke

Author: Erica Locke

One of the standard tools for every forex broker or trader is the forex chart. The forex chart is a graphical record of a certain currency pair's performance over a given period of time. Interpreting the forex charts is a crucial task of a trader or broker so it is of the utmost importance to fully comprehent them.

Every forex chart consists of two currency pairs: EUR/USD, USD/GBP, etc. Remember, all forex trading deals with different countries currency in relation to each other. The EUR/USD chart, for example, tells you how the euro and the U.S. dollar compare. Along the bottom of the chart is the timeline -- 15 minutes, an hour, a day, a week, or some other period. Going up the right-hand side are incremental amounts. For the EUR/USD chart, the amounts might be 1.2531 at the bottom, going up to 1.2561 at the top. And of course the middle of the chart shows what position the EUR/USD pair held at what time.

Main purpose of the forex chart is to show in graphic terms how a currency is behaving over a period of time. You can instantly observe when a currency is growing stronger or weaker and take immediate action. Choosing the time frame helps you see very minor trends (in a 15-minute period, say) or more long-term ones (over the course of several days, perhaps).

It is easy to find forex charts because they are all over the Wolrd Wide Web. Websites for forex brokers, tutors and other forex related sites offer these charts. Those charts are fine to take a peak now and then to see trends developing but a more serious trader must have immediate access to charts and not through a website. Thats why trading software gives you forex charts, too (you need to have broadband Internet so you can be always connected). Obviously, if youre going to be trading, you need to have convenient access to the very latest charts.

In a world with multiple currencies, there are just too many possible currency pairs to keep track of mentally. Forex charts show you in a instant what any currency pair is doing, and good trading software gives you the possibility to save multiple charts as "favorites." Naturally youll want to keep an eye on the charts representing investments youve already made, and its smart to have a few additional ones saved, too, so you can watch for trends in currencies you havent traded yet. You never know when a lucrative new opportunity is going to be revealed. Learn More About: Online Trading With a Forex RobotAbout the Author:

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