How To Read A Forex Graph And How To Apply It In Your Trading Ventures


The forex chart is perhaps the most essential tools in a currency trader's arsenal. Simply put, it is a graph of a specific currency pair's performance over a given period of time. Analyzing currency graphs is necessary to a trader's business, so it's important to grasp how to read them and understand what they mean.

Each forex chart will be indicated with a currency cross: EUR/USD, USD/GBP, etc. Remember, all currency transactions with different nations' currency in relation to each other. The EUR/USD chart, for example, tells you how the euro and the US dollar compare.

Along the bottom of the graph is the timeline -- 15 minutes, an hour, a day, a week, or some other period. Going up the right-hand side are incremental amounts. For the EUR/USD chart, the amounts might be 1.4531 at the bottom, going up to 1.4561 at the top. And of course the middle of the chart shows what position the EUR/USD pair held at what time.

The currency graph is helpful as it shows in graphic terms how a forex cross is doing. You can see at a glance whether a currency is becoming stronger or weaker, and you can act accordingly. Choosing the time frame helps you watch very minor trends (in a 15-minute period, say) or more long-term ones (over the course of a few days, perhaps).

You may find forex graphs all over the Internet, on websites of foreign exchange brokers, tutors, and on other forex-related sites. Those are OK for glancing at trends now and then. But to be a serious trader, you need to have access to charts much more readily, without having to go to a website. That's why trading platforms provide you forex charts, too (you should have broadband Internet so you can be "always connected"). Obviously, if you're going to be trading, you need to have convenient access to the very latest charts.

With dozens of world currencies, there are far too many possible currency pairs for anyone to keep track of continuously. Currency graphs show at a glance what any forex pair is up to, and a good software allows you to save multiple charts as "favorites." Naturally you'll want to follow the charts representing trades you've already made, and it's smart to have a few additional ones saved, too, so you can watch for trends in currencies you haven't traded yet. You never know when a favourable new opportunity is going to be revealed.

The best approach is to identify such opportunities is subscribing to the services of a reliable forex signal provider. A forex signal is a market forecast and trading recommendation. Plenty of such forex signals are available online against a modest subscription fee. But always check out first the background and the past performance of the signal provider, as only reliable forex signals will make you money, not losers.


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