Diving into Forex trading, you will most likely face the need to learn reading the statistical charts and graphs. This ability will enable you to analyse possible actions that are based on the present Forex environment. If you can read the graphs and charts, you will get a lot of useful information for building your trading strategy.
For instance, when you want to read charts related to USD/EUR pair, you have to know that the data about the basic currency (American dollar) is shown on the left side of the chart point, and Euro information is accordingly shown on the right. As these currencies are a pair, they will be drawn in paired way. Each value of the chart will show the price of the basic currency (left side) evaluated in the second currency (right side). This chart will show how many euros you will have to give away to buy one American dollar. As for the scales, the horizontal one will indicate time, and vertical one will show the rate of the pair price. You have to try and find the relation between rate changes and time, as this will help you understand how the rates will behave in future.
A chart can be presented in many ways – you may prefer using a line chart to investigate the rates and their reversal points or opt for bar and point chart modes. It is the purpose of the particular chart that influences your personal taste. For example, line charts are generally used to find the trends in Forex rates changes. Candle charts, at the same time, are used to monitor the price change in a certain time period. Usually, the longer candle will refer to bigger price change.
Reading the charts is not a panacea, though. Even if you are excellent in this, it won’t guarantee you 100% precise predictions, as the Forex market is always unpredictable. But this ability will obviously help you to succeed in trading by minimizing the risks. Indeed, studying the charts is what the morning of every trader starts with. When you spend some time on Forex, you start to notice the relationship between the past and the current market behaviour. After you start making conclusions, you find out that different trends are repeated in a cycle way, and if you have basic Forex education, you’ll be able to predict the next rate change.
The most convenient way to read charts is to have access to them online. Major websites update them in real-time mode, so it’s no use to print them on paper.