If you look on different web sites on the internet for Forex information you will find that one of the main features of Forex will continue to show up in searches, and that will be "learn the basics". This includes knowing how the system works, and reading the Forex charts.
If you don't have any basic knowledge of the system you will have a tough time, especially with reading the Forex charts, as you can make simple errors when reading the charts.
You must learn to read Forex charts as it is vital to your success, and make the Forex system easier for you to understand, which is why I have written this article to teach you how you can read the Forex charts.
5 Steps that will help you read the Forex charts:
1. By buying a currency pair, and looking to profit from it, you will want a strong base currency to strengthen your terms currency which will make your currency chart for the pair go up and make you a profit from the trade.
This also works with selling. If you sell the currency pair you will want the base currency to weaken your terms currency to make your currency chart go down but still make a profit from it
2. Set up your own charts with your own time frame and indicators. The reason for doing this is that other systems will use multiple time frames that determine the trade of the currency pair by using indicators such as momentum.
An example of a system is that it will use large periods of time to see the overall trend whilst it will use short amounts of time to show a small rise.
3. Remember that it is the bid price that is displayed on the chart not the ask price. The price always has a bid and an ask offer which means that if you are going to buy a EURUSD then the bid price may be 1.3055 while the ask price may be 1.3060. Remember that when you buy you have to buy at the higher price which will be the ask price and then when you sell you must sell at the lower which is the bid price.
For example if a chart that you are selling says 1.3055 then that is the price you will get when you sell it, however if you are buying one that has the exact same price then you will pay 1.3060 for it as it is the ask price (the higher of the two).
4. Have a world clock near you. It might sound very random but it is useful because if you take a look at the Forex charts you will notice that the time at the bottom of the charts are set to a particular time zone which are the same as the Forex providers, doesn't sound that random now does it? Another reason you need a world clock is to convert the time for announcements.
Many announcements will take place and without a world clock you won't know when the announcement comes into your time zone.
5. Always check the times on your chart. If you are going to enter or exit a trade and don't want to get stopped before the announcement then you need to be really accurate as traders will perform to the minute after the announcement has taken place. So be quick!
I've just given you 5 tips to read Forex charts that will keep you from making common mistakes when looking at your charts. Keep these 5 points with you when you are looking at Forex charts so you that won't make those silly mistakes.
Learn more about Forex at http://www.learnforexonline.net. Download a free guide entitled "Forex Fundamentals" just for stopping by.
You can also visit http://www.squidoo.com/Forex-trading-overview for an overview of the Forex Trading system, and sign up for a FREE Forex account which you can access real time Forex rates, access to free charting features, innovative trading tools, and an online trading community that you can communicate with to achieve GREAT saccess with Forex.
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