The forex trader's arsenal contains a lot of different weapons 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 performance of a currency pair over a fixed period of time. Reading forex charts is central to any trader’s business and so it is important to know how to read them and to understand exactly what they mean.
A forex chart will be created for a single currency pair such as the EUR/USD or USD/GBP and shows the prices of the two currencies concerned against one another over time. For instance, the EUR/USD chart shows you how the Euro and the US dollar have moved against one another during the period for which the chart has been plotted.
Across the bottom of the chart is the timeline which can for instance be divided into 15 minute, 60 minute, one day, one week, or longer periods of time. Then going up the right-hand side of the chart are incremental amounts which are usually set to run from a bit below to a bit above the lowest and highest prices attained during the period in question. For the EUR/USD chart for instance the amounts might run from 1.2531 at the bottom to 1.2569 at the top.
The forex chart is useful because it paints a clear and simple to read picture of how a currency pair is doing and you can tell at a glance if a currency is strengthening or weakening so that you can act as necessary. The choice of the time frame for a chart is also important as a short time frame can help you see minor trends while a long time frame can help you to spot longer term trends.
Free forex charts are available all over the Internet on various different websites and many of these will even allow you to put charts on your own websites. These charts are fine for looking at trends occasionally but serious traders will have to have access to far more detailed charts which are constantly updated in real time. Basically this means having access to suitable trading software which is operated through a broadband internet connection so that you are always connected. Anything less than twenty four hour access to the latest charts across a broad range of different currencies is going to make life very difficult fordedicated traders.
With dozens of world currencies being traded each day there are far too many currency combinations for anyone to track of them all in their heads and the beauty of the correct forex software is that it permits you to view multiple forex charts to indicate at a glance what your favorite currency pairs are doing. Of course you will wish to keep an eye on those charts displaying currencies in which you have already made investments, but you are also going to want to keep tabs on other currency pairs which you might wish to open trades in if they move in the right direction.
The ability to easily and quickly watch the progress of a wide range of currency pairs means that you are far less likely to miss investment opportunities which you could so easily miss without access to the correct forex charting software.
LearningForexTradingOnline.com provides information on forex currency trading and also includes details of free forex charts | |
