One of the basic skills you will need for becoming a trader is how to read Forex Trading charts – a kind of information representation most popular among Forex users. Being able to read charts makes you a fast-reacting trader able to operate with statistics efficiently.
You need to understand a few simple terms used in Forex charts. Each currency pair is signed in six-letter code like EURUSD that means a rate of euro currency in US dollars equivalent. If EURUSED=1.311 this means that 1000 euros cost 1311 US Dollars.
Reading Forex Trading charts is not so difficult as it seems for the first sight. If you are looking for making a purchase of specific currency pair, you will logically need a statistics of how this pair behaves during the proper period of time. If you would like to buy currency pair, you should look for the currency chart going up, if you need to sell it, a suitable situation on a market is when the chart goes down.
Don’t forget that different charts display the situation of different time frames. This can be a few hours chart or a few minutes one, and the situation will be cardinally different. If you are trading relying on short-term prognosis, set up your platform to display proper charts. If you rely on reading longer Forex Trading charts, do appropriate settings to be sure you see the picture you exactly need for analysis.
Don’t forget about the time shown at charts. It usually set to a specific time zone and may differ from your local time. Being mistaken with the time can cost you profit. Due to the differences in software platforms sometimes the time of the actual candle opening can not correspond the time on charts.
When reading Forex Trading charts, check what kind of currency pair price is displayed on a chart. This can be BID or ASK prices. Currency pair purchase is made at an ask price, while its sale is made at bid price. Ask price is always higher.
These are the main peculiarities of reading Forex charts that any trader should remember about. Proper information is always a key to successful trading deals, and charts are one of the best ways of tracking big massive of financial indicators behaviour.