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How To Start Trading The Forex Market? (Part 6)

 



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HOW TO READ FOREX PRICE CHARTS? 


Forex Price Charts, what DO they mean and the way to use them? 


Important numerous facts as discipline, trading rules, not being greedy etc., but one among the foremost important things is: 


LEARN to read the charts as Charts represent the lifeblood of the market. 


I admit that reading charts, and interpreting patterns, are more an art than a skill. Base and apply your entry and exit decisions on YOUR OWN combined methods of technical and fundamental analysis. 


FOREX charts, are easier to interpret and to use. They reflect a slower moving, stable economy of a rustic , compared to the stock exchange , with its daily drama of company reports, Wall Street Analysts and shareholder demands. 


Unlike stocks, currency charts don't spend much time in trading ranges and have the tendency to develop strong trends. Furthermore, Forex with its 4 Mayor currencies is simpler to research than tens of thousands of stocks. 


(Mayor currencies are: USD/JPY, EUR/USD, GBP/USD and USD/CHF) 


The complimentary FREE live charting software, with the last word leading edge technology provided by http://www.fenixcapitalmanagement.com/ , are going to be absolutely sufficient for you to research and watch anybody currency pair. Understanding just a couple of basic points about the technical analysis of currency chart can cause increased profit potential. 


Pricing - Price reflects the perceptions and action taken by the market participants. it's the dealing between buyers and sellers within the Over-The-Counter (OTC) or “interbank” market that makes price movement. Therefore, all fundamental factors are quickly discounted in price. By studying the worth charts, you're indirectly seeing the elemental and market psychology all directly , in any case the market is fed by two emotions - Greed and Fear – and once you understand that, then you start to know the psychology of the market and the way it relates to the chart patterns. 


Data Window Chart – FCM and most online charting stations, once you click on a price bar or candlestick, it'll display alittle box of knowledge usually called a shopwindow which can contain the subsequent items: 


H = Highest Price 

L = Lowest Price 

O = Opening Price 

C = Close Price (or Last Price) 


The most common sorts of price bars, utilized in FOREX trading, are the bar graph and therefore the Candlestick chart: 


Bars Charts - 


Price bars are a linear representation (a line) of a period of your time . this permits the viewer to ascertain a graphic representation summarizing the activity of a selected time-frame . As an example, i exploit 10 minutes, hour and daily interval for my systems. Each bar has similar characteristics and tells the viewer several important pieces of data . 


First, the very best point of the bar represents the very best price that was achieved during that point period. rock bottom point of the bar represents rock bottom price during an equivalent period. Regular bars display alittle dot on the left side of the bar which represents the opening price of the amount and therefore the small dot on the proper side represents the price of the amount . 


Candlesticks - Japanese Candlesticks, or just Candlesticks as they're now known, are wont to represent an equivalent information as Price bars. the sole difference is that the difference between the open and shut form the body of a box which is displayed with a color inside. A red color means the close was less than the open, and therefore the blue color represents that the close was above the open. 


If the box features a line rising from the box it represents the high and is named the wick. If the box features a line taking place from the box, it represents the low and is named the tail. 


Many interpretations are often made up of these "candlesticks" and lots of books are written on the art of interpreting these bars. 


Chart Intervals & Time Frames: 


A chart duration & Period, or time-frame , basically refers to the duration of your time that passes between the OPEN and therefore the CLOSE of a bar or candlestick. 


For instance, together with your broker software, you'll be ready to view a currency pair, during a 1-hour time-frame over a 2-day period, 5-day period, 10-day period, 20-day period and 30- day period. 


Most of the short-term time intervals (5-min and 1-min charts) are used for entry and exit points and therefore the longer- term time intervals (1-hour and daily charts) are wont to see where the overall trend is.