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You cannot possibly set-up a winning trade if you have no idea about how to read forex charts. The chart records historical as well current movements of currency pairs which provides you a good idea of where they likely heading in the next minutes, hours or days. It is a visual representation of the results of the calculations that is being done by the indicators you have installed in your forex software. The calculation takes into account the various factors that have bearing on the values of currencies being traded including what the traders themselves are doing. You know of course that traders influence the direction of currencies. Accurately interpreting the meaning of the charts is a skill you need to acquire in order to attain success in forex trading.
One forex chart that is commonly used by traders is the Japanese candlestick. Veterans as well as newcomers to the trade find the candlestick accurate and easily understandable. It is a forex chart that provides one of the best graphical representations of what’s happening in the market and to particular currencies at any given time. Having the skill to read what a Japanese candlestick is saying – whether there’s a trend developing or not – gives you the ability to identify excellent entry and exit points which should result to high rate of trading success.
However simple the Japanese candlestick is, if you are new to the trade you will still need a bit of time to get all the symbols and their meanings of the fully internalized. There are symbols for bulls and bears and it also utilize color schemes to represent highs, lows, open and close. There are terms, in Japanese most unfortunately, the meaning of which you have to understand. Doji for example is a reversal signal of a currency opening and closing at almost the same value or price. There are other terms such as gravestone doji and dragonfly doji. Before the Japanese candlestick can make sense to you and thus useful for your trading activities, you need to understand what these terms means.
There are other charts, of course, you may want to assess some of them to see what fits your needs best. One thing is sure, however, you can even think of starting to trade real money before you have mastered the charts.
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