Historical Forex Charts
Learning to read the forex chart is important. Once you learn the vital skills, it becomes much simpler and quicker to practice and understand the actual functioning of the system. It will alert especially the newbie’s of the pitfalls that occurs while trading.
Let’s begin with the basics; every pair of currency is quoted in a similar way. The EURUSD pair of currency for example is always EURUSD. Here the EUR is the base currency while the USD is the term currency and not the other way round. So if the EURUSA chart shows the price fluctuating to 1.2155, it means 1 EURO is worth 1.2155 US dollars. Your trade size is equivalent to the base currency you are trading. So if you intend purchasing 100 000 EURUSA, that means you are purchasing 100 000 Euros. The following steps will help you to read the forex chart easily.
When you buy a currency pair that means you want that currency pair chart to move higher, which in turn will earn your profits. The base currency therefore needs to be stronger than the term currency. However in case you sell off the currency pair that means you want that particular currency pair chart to slide down as it will reap profits for you. This can happen when the base currency weakens in comparison to the term currency.
Always check the displayed timeframe, trading system use different time frame. To ensure that you go don’t wrong with the indicators and timeframe that you are trading with set your chart accordingly.
Remember a forex chart displays the bid price rather than the displayed price. So when you buy, it is the ask price that you are buying, which is higher and when you sell, you are selling at the bid price which is lower.
Also the time displayed at the bottom is set in accordance to that particular time zone of that region. Therefore in order to convert the time zones of different regions you must keep a world clock at your disposal. This helps when major trading announcements are being made.
See whether the time displayed on the forex chart corresponds with the candle opening and candle closing as your charting software could be displaying something different. These essential keys will help you avoid common mistakes generally made by beginners in reading charts. Precision will lead to speedy progress and this in turn will yield more profits.