Interpret Forex Charts Clearly To Take The Right Decision

For somebody new to forex, learning how to read and comprehend forex charts feels like a formidable challenge

. On the first glance they appear to be nothing short of monstrously complicated but what one needs to remember is that reading charts is as difficult as you make it out to be.

Reading charts right is one of the vital skills required to survive in the forex trade. It is one of the fundamentals that you cant afford to be poor at. Technical analysis which is especially used for day trading is completely dependent on the price supplied by the chart you are using and the tools will be used as overlays on the charts. In such a scenario the understanding of charts is an imperative skill.

A forex chart can take on a completely different form depending on the option you chose it view them in. The software on which you have chosen to view charts will usually have several settings for the display form of the time frame and price that you want to view. Time frames can be short term, midterm and long term, and can range from few second to more than a decade. Prices can most commonly be displayed in bar, line or candlestick formats. Out of these, candlestick display modes (e.g. Japanese candlestick mode) are the most popular. Line charts are simpler and easier to understand showing you clearly the closing price for each interval of time. The bar format shows you the where the prices opened and closed and the highs and lows

You must pay attention to choosing the correct time frame when you are analysing charts. Some forex trading systems use multiple time frames to make out the entry of a forex trade. To make sure you are using the correct time frame is to adjust your charts with the right time frames and indicators with the platform you are using to trade and then save and reuse the settings.

The times shown at the bottom of these charts are according to the time zone from where they have come from that is the where the forex provider is located at. To make things easy for yourself always have a world clock at hand to convert times in face of major economic announcements so that you know when do you accordingly have to make the trade .Further, make sure that the times on your forex chart matches with time when the price opens or when the price closes. There might be a difference in the trading software used by you and the trading software used by the provider.

Trades made in forex should never be a gamble based on your intuition. Forex is a methodological trading process where charts give you the information you need to make informed decisions. Make friends with forex charts and the right trades shall make friends with you.

by: Alvi Erine

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