subject: Forex Charts Make Forex Trade Easy And Effective [print this page] Trading of currencies of different nations around the world against each other is known as foreign exchange trade or forex trade. This is usually done by a market maker or a broker, in which he selects a currency pair (this he does with the help of the skill and experience which he has gathered over a period of time), the value of which he expects will change accordingly and therefore trades as per his prediction. For example, if a speculator decides to choose Euro/US Dollars for trading, that person buys Euros against US Dollars and during selling he sells Euros against US Dollars. Here, Euro is the base currency or the first listed currency( as it is the basis on which the buy or the sell rests). On the other hand, US Dollars is the quote currency or the counter currency.
A person buying a particular currency is said to be long in that currency. Similarly, when a person is selling a currency, he is said to be short in that particular currency. These trades happening online usually get over in just few mouse clicks and take only few seconds !!! The values of these currencies fluctuate due to various the changes in socio-political and economic conditions of various countries.
Inherently, forex trade was for big financial institutions like investment banks and government institutions like Central Bank. However after the coming of the internet, individuals can also take part in this trade via online intermediaries. But unlike big financial institutions (both government and privately owned), small time traders do not have expert team and hence they seek this support from forex forums, where discussion on the market conditions and expert opinions are available.
Another way in which forex trade is highly benefited is by studying the forex charts. These are interactive charts with real-time data and are presented with indicators which feature Stochastics, MACD and RSI that can be fully customized. Popular charts include AUD/USD, EUR/USD,GBP/USD, USD/CHF, and USD/JPY.
There are various ways to view FX charts, viz. candlestick, bar and line format. The Japanese candlestick chart which is very popular in the US market originates from rice trading in the Japanese market during the 1700's and is the common method used to illustrate and predict price on a forex chart. They can be viewed as colorized indicators which show price fluctuations. During increase in price, the indicator turns blue indicating that it is heading higher. And when it decreases, it becomes lower and turning red slowly. Bar chart, on the other hand, can show the highs and lows, the opening of the price, etc. Line charts show the periodic closing of price. They are a good option to simplify the display of price.
Forex charts are a scientific way of representing things. It might appear to be complicated in the beginning; however, in course of time, with patience and understanding, one can interpret these charts very easily. Time frame of these charts range anywhere between one second to ten years depending on the charting system which is used. Price of forex charts can be displayed in bar, line or candlestick as mentioned earlier. Hence, it gives a clear and lucid view to an average trader on what the condition of the forex market is, thereby making currency trade easier and more accurate. So, these charts are indispensable for forex trading.
