Ihab Salloum[ad_1]
Learning to use a forex chart will greatly improve your ability to become a profitable forex online trader.
Types of Forex Charts
As with stock exchange investing there are several popular chart types used to visually analyse trading data. Some of the forex chart types include:
- Bar Charts – quite often used in security market technical analysis. Bar charts are quite easy to construct making them quite popular. The charts are constructed by showing intra-day, daily, weekly or monthly movement as a vertical bar. Opening and closing prices are shown by horizontal marks to the left and right of the vertical bar respectively.
- Candlestick Charts – were the secret weapon of the Japanese traders until Steven Nison of Merrill Lynch made the use of this chart popular in western markets. The candlestick chart is credited to Munehisa Homma, a Japanese rice trader in the early 18th century. The candlestick is the graphic representation of the price bar: the open, high, low, and closing price of the period. The candlestick has become a widely used tool in online currency trading. When you use the candlestick in your forex chart there are many patterns that you can learn to identify to help with your technical analysis.
- Point and Figure Charts
Benefits of Using Forex Charts
The forex chart can be very useful when looking to analyze markets when using technical analysis. The technical style of trading ignores fundamental factors and is only used with the price action of a market. This can be good to also remove the emotional effect trading has on your mental state.
With a forex chart, you are able to see the movement of the market in a visual format. In addition to the standard chart, you can add indicators or oscillators to help you make decisions about when to get in or out of your currency trades.
Indicators Used in Forex Charts
In case you do not know what an indicator is, it is a series of data points used to help predict movements in currencies. Some of the more popular indicators used on forex charts are:
- Moving Averages
- Waves
- Bollinger Bands
Using Live Data Feeds and Software
When using forex charts, you should be using live data feeds. This means the data you are seeing in your forex charts is based on actual currency rates at the time you are viewing the chart.
To get your data and software for your forex charts, you have free options and paid options. Quite often after selecting your forex broker you will receive some form of forex charting through their trading platform.
With the paid options, you normally would pay for a data feed to construct your forex charts. This is typically a monthly subscription. You are quite often able to receive a free trial before committing to a subscription.
I currently use FXCM Trading Station, and it comes with a built-in forex chart. You can ask your broker what they recommend if you are wanting more advanced forex charting options.
Conclusion
If you are considering getting into the forex market and trading currencies, I strongly recommend learning what you can about using a forex chart to help with your trading. It is always best to rely on your forex chart knowledge rather than relying solely on a Forex signal service, which comes at a cost.
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