Forex Charting Basics

If you are looking to become a successful foreign exchange trader you are going to need to learn about the forex charting basics.

You must, acquire skills in being able to read the charts themselves and possibly even get to a stage whereby you are able to forecast an accurate prediction on how the market is likely to behave in the future.

Forex charting basics come under the term of technical analysis (see my article on forex technical vs forex fundamental analysis). This method relies entirely on the price of a specific market and the trend patterns are followed and recorded in different forex charts.

Click Here. Make Money With Forex Candlestick Trading.

There are a lot of forex traders who do not have time for technical analysis as they do not believe that this method allows for enough accurate scope in being able to predict trends. Instead, these traders would prefer to rely on fundamental analysis as this approach is much more in depth. This method follows the economical factors which are prevalent to the currency pairs and proves to be more helpful in predicting future patterns.

In order to build a skills base in forex charting basics, it is necessary to note that there are a number of chart styles that can be used. This will always depend on your own personal preference and what works for one trader, may not necessarily be ideal for another.

The most popular forex charts come in the style known as 'forex candlestick' charts. These display the information in an eye-catching format; with the timescale across the 'x' axis and the actual price indicated on the 'y' axis. This type of chart makes it easy to identify trend patterns immediately. The candlestick effect derives from how the market has performed within a specific session. It records the opening and closing prices over this time frame and different colors will often be used to indicate a rise or fall in the trend patterns (e.g. blue or red). 

Line charts work in a similar way to candlestick charts. However, they only plot the closing prices at the end of a session and they do not provide such a clear indication of the difference between opening and closing patterns. For a chart that provides a quick-glance easy recognition of the market, line charts can be very useful for you.

Bar charts will provide you with similar information to both of the charts mentioned above. A bar is used for each specific session and this measures the movement in the market during that period of time. This is not the open and close rates, rather the entire range of movement that transpired within the whole session. A line will be marked on the bar (usually moving horizontally to the right) to indicate the eventual closing price, so this type of chart really does provide some useful statistics.

Once you are able to master forex charting basics you will find that you are so much more adept in being able to follow the market behavior of your selected currency pair. There are certainly some traders who are able to glance at a forex chart and get an idea of how the trading pair is likely to fluctuate in the future. This skill will make you money as a forex trader.

When getting to grips with forex charting basics for the first time, it is often a good idea to familiarize yourself with a timescale that you feel the most comfortable with. This will enable you to gain your confidence in reading forex charts more quickly and should prove to be much less confusing for you.

FREE! 7 Day Forex Course!   Insider Tips on Forex Strategies! Name: Email: (We hate spam, too! We will never share your email address with anyone. Period!)