It Is Crucial For Forex Traders To Learn How To Interpret Forex Charts
November 29, 2018
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It Is Crucial For Forex Traders To Learn How To Interpret Forex Charts
The forex trader's toolbox contains many different tools and one very important tool important is the forex chart. Put simply, a forex chart is a graph of the performance of a particular currency pair over a set period of time. Reading a forex chart is essential to any trader?s business and so it is extremely important to know how to read them and to understand just what they mean.
A forex chart is drawn for a single currency pair like the EUR/USD or USD/GBP and shows the prices of the two currencies concerned against each other over a period of time. For instance, a EUR/USD chart tells you how the US dollar and Euro have moved against each other during the period of time for which the chart has been plotted.
Along the bottom of the chart you have the timeline which can for example be divided into 15 minute, 60 minute, one day, one week, or longer time periods. Then going up the side of the chart are incremental values which are normally set to run from a bit below to a bit above the lowest and highest prices reached during the period in question. For example, for a EUR/USD chart the values may run from 1.2539 at the bottom to 1.2565 at the top.
forex charts are helpful because they paint a very clear and easy to read picture of just how a currency pair is doing and you are able to see at a glance if a currency is getting stronger or weaker so that you can take action as necessary. The choice of a time frame for a chart is also important because a short time scale can help you see very minor trends and a long time scale can help you to see long term trends.
Free forex charts are available all over the Internet on numerous websites and many of these sites will even allow you to put charts on websites of your own. These charts are alright for looking at trends from time to time but dedicated traders will need to have access to more detailed charts which are continuously being updated in real time. This is essence entails having access to suitable trading software which operates on a broadband internet connection so that you are always online. Anything less than round the clock access to the most up-to-date charts covering a wide range of currencies will make life very difficult forserious traders.
With literally dozens of the world's currencies being traded each day there are far too many possible currency pairs for anybody to track of them all in their heads and the beauty of the right forex software is that it lets you see multiple forex charts to indicate at a glance what your favorite currency pairs are doing. Naturally you will wish to keep an eye on those charts showing currencies in which you have already made investments, but you are also going to want to keep track of other currency pairs which you may want to invest in if prices move in a favorable direction.
The ability to quickly and easily watch the progress of a wide variety of currency pairs means that you are less likely to miss trading opportunities which could so easily pass you by without access to the right forex charting software.