Many of us, as a newcomer, find forex charts a bit complicated. At first, when you look at them, you can’t understand what they are and how you use them.
The best way to get an advantage from them is that you have to leave them for some time. It doesn’t mean don’t use them.
Before applying the strategies of forex charts the main thing is to understand them deeply. You must know to read them like an expert.
How to read forex charts like a pro? The three main types of forex charts are line, bar, and candlestick charts. There are different techniques to read these charts correctly. The most helpful technique is to read them using indicators like Simple moving average, Bollinger bands, and Relative strength index.
Forex charts perform an important role in exchange to make money. The successful way for profitable trading is to read them in the right way.
Forex charts will help you to know about the rise and fall of currency prices. It may also guide you to set the time frame of trading.
Do you want to know more about reading charts?
What are you waiting for?
Let’s start reading without wasting your time!
What is a Forex Chart
Are you planning to trade in the forex market? As a beginner, many obstacles will break your courage and force you to quit this platform.
So, a trader must know every corner of the forex market. You often hear about Forex Charts but do you know What is a forex chart?
Typically, forex charts are charts that help you to look at the exchange rates of different currencies. These may also tell you how the change in the rate of currencies works with time.
So, you need to be involved in forex trading deeply and try to understand its trading strategies. You must have to learn about forex charts and how you use them for your benefit.
You have to know candlesticks’ patterns to understand the forex chart as well. You can observe forex charts to select a pair of currencies that you want.
How Forex Charts Work With Time Frames
Time frames play an important role in Forex Charts while trading. As you know you can’t continue trading all the time. You have to set out a time frame for each trade.
It depends upon the time duration that you set for your trading. Many charts show you the time frame set for the daily time range. It will show you the data for trades at least for 24 hours.
You can choose another time structure of months, minutes, or weeks. Learning forex time frames is very important as it will help you to trade in a balanced way.
It will also help you chase the trends and get big chances for making money.
Different Types of Forex Charts
Do you think you can read or select only one type of chart? No, you are wrong….
There is a vast range of variety of forex charts. But the three are the most famous among them. There is a need to understand them deeply if you want to get the benefit from them.
These are listed below with all necessary details:
The line chart is very simple and easy to understand. Look at your chart…
You can easily view a line drawn from one closing price to the other. It will also reveal the rise and fall of currency pairs with time. Usually, it happens when these charts get a link with a line.
This up and down situation will be helpful for a trader to select the right currency pair for trading.
These charts are complicated in some ways but prove ideal to get more relevant information. If you want to learn about the opening and closing of currency prices, this is the best forex chart for this purpose.
It will also show you the high and low prices of the market. Take your bar chart and read it carefully. Look at the bottom of the vertical bar. It will show the lowest trading price of that time period.
On the other hand, high prices will show on the top. While the opening prices will appear on the left horizontal bar. The right side of the horizontal bar displays the closing prices of a trade.
Candlestick charts are also used to reveal high to low prices in a vertical line. Blocks are also pointed out in the center to show the scales for opening and closing prices.
These blocks are filled or colored in the middle to show them properly. But some are left empty. If the block is colored, it means the currency pair is opened at a low price. On the other hand, empty or unfilled blocks indicate a higher closing price in comparison to the open price.
You can also fill such blocks with other colors.
How To Read Forex Charts Through Indicators
If you are trading in the forex market for many years, you must be aware of the indicators that are used to set out trading strategies.
Such indicators help a trader to trade properly and also make it easy to read charts clearly.
There are many indicators but the most popular are listed below:
Simple Moving Average Line
It is the most common forex indicator that is also known as SMA. A trader can calculate it with the help of a closing price of a set period by adding it.
It can also be calculated by dividing the number and time period of that trade.
Here is a simple example…
If you have a time period of 7 hours, add closing prices of that time and divide the total by 7. In this way, you can get a simple moving average line.
It is a type of forex indicator that measures the Volatility of the market. If Bollinger Bands come near each other, this process is called Squeeze.
According to traders, it is a sign of increasing volatility. It also displays credible trading chances on the horizon.
While broad Bollinger bands are signals of decreasing volatility and increasing Feasibility of a trade.
Relative Strength Index
This indicator is very important to understand the forex charts properly. It is used by traders to recognize buying and purchasing conditions of the market in excess.
Each trading chart indicates the scales from 0-100. If you find the reading around 20, it means the market is in Oversold Condition. So, a trader must be ready to buy.
On the other hand, if the reading goes above 70 or 80, it is an overbought condition of the market and a trader should start to sell.
Most Asking Questions
How do you read a candlestick chart?
Simply, if the upper shadow is short, it means the open day was near the high of the day. While the upper shadow of an up day displays on the chart, it is the sign that close was near the high. It is the relationship of the day open, close, high, and low.
Which is the best time frame for day trading?
The best time frame for day trading is 1-2 hours that will start with the opening of the market. Many trading markets open about 9:00 am.
Which chart is best for trading?
Candlestick charts are the best option as they show high, low, open, and close prices of the market while trading. They are the best solution for short-term analysis.
If you have read the above post without skipping any point, then you must be fully aware of Forex charts.
Here we summarize our informative content about How to read forex charts like a pro. We have covered all the basic points that will help you to understand these charts.
As we know many trading markets provide Demo accounts to help a trader, trade without any risk of loss.
These accounts make you perfect to read forex charts easily. Hopefully, this post will prove informative for you.
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