It Is Crucial That The Forex Trader Learns To Read A Forex Chart

By Author: Donald Saunders
Total Articles: 84
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There are many different tools in the forex trader's toolbox and one of the most basic and most important is the forex chart. In its simplest form, a forex chart is a graph of the prices of a particular currency pair over a fixed period of time. Reading forex charts is crucial to any trader's business and so it is extremely important to know how to read them and to understand exactly what they mean.

A forex chart is drawn for a single currency pair such as the EUR/USD or AUD/CAD and shows the movement of the currencies concerned against one another over time. The EUR/USD chart, for instance, tells you how the US dollar and Euro have moved against one another over the period of time for which the chart is plotted.

Along the base of the chart is the timeline that can for instance be divided into 15 minute, one hour, one day, one week, or longer periods of time. Then running up the right-hand side of the chart are incremental values that are normally fixed to run from a little below to a little above the bottom and top prices achieved during the time period in question. For a EUR/USD chart for instance the values ...
... may run from 1.2535 at the bottom to 1.2571 at the top.

Forex charts are useful because they paint a clear and easy to read picture of how a pair of currencies is doing and you can see at a glance if a currency is getting stronger or weaker so that you can take action as necessary. The selection of a time frame for a chart is also important and a short time frame can help you to spot minor trends and a long time frame can help you to spot longer term trends.

You can find free forex charts across the Internet on a number of websites and a lot of of these sites will even allow you to put charts on your own websites. These free charts are fine for glancing at trends from time to time but serious traders will need to have access to more detailed charts that are continuously being updated in real time. Essentially this means having access to appropriate trading software that operates through a broadband internet connection so that you are always connected. Anything less than twenty four hour access to the latest charts across a wide range of currencies will make life difficult fordedicated traders.

With dozens of world currencies being traded each day there are far too many currency pairs for anybody to keep track of them all in their heads and the beauty of the correct forex software is that it permits you to see multiple forex charts to show at a glance just what your favorite currency pairs are up to. Of course you will want to keep a close eye on those charts showing currencies in which you have made investments, but you will also want to keep tabs on other currency pairs which you may wish to open trades in if they move in the right direction.

The ability to quickly and easily watch the progress of a wide range of currency pairs means that you are less likely to miss a trading opportunity that you could so easily miss without access to the correct forex charting software.