How to Read Forex Charts

Learning how to read Forex charts is essential if you want to be a successful trader in the Forex market. You have to be able to look at charts and see what the market is doing before you can place any trades. Here are the basics of how to make sense of a foreign exchange chart.

Forex Charts

Forex charts are offered by every Forex broker and many other sources. In fact, if you want to see a chart, you can go here on the site and check one out. These charts are essential when it comes to trading the market. If you cannot read a chart, you really can't trade the market that effectively. The chart shows you what the price of a currency pair has done over a certain amount time.

Price Information

Depending on what type of chart you are looking at, the price information could look differently. Some charts have candlesticks on them while others have lines. A candlestick looks like...well, a candlestick on the chart. You will see a series of vertical lines with wicks coming out the top or bottom of some of them. A line chart is just a line that moves up and down with the price. With most charts, if you hold your mouse cursor over the line, it will bring up more information like the open price, close price, high and low.

Time Frame

When you are learning how to read a Forex charts, it is essential that you know which time frame you are looking at. With most charts, you should be able to click on a number on the top or bottom and change the time frame.

Some common time frames that you may see are 1M (1 minute), 5M (5 minute), and 1H (1 hour). You could go up to time frames of 1 month on many charts. The smaller the time frame that you are looking at, the more detailed the price information on the chart. This allows you to see what the short-term trend and the long-term trend is doing in the market.

Indicators

With most trading platforms, you can use indicators on your chart to help you make trading decisions. For example, when you use the Metatrader platform, you can put many different indicators on your chart at once. These indicators can do a lot of different things and provide you with a great deal of information. If you are using a specific strategy or trading system, you may be able to upload custom indicators to your charts.

Price

On the chart, you should also be able to see the current price for the currency pair. Most brokers will show you two prices at the same time. The first price is the bid price and the second is the ask price. The difference between the two prices is the spread. When you first learn how to read Forex charts, this part can be confusing, but after some time, it becomes second nature.


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