Learning currency trading can take up some time. However, as long as you have a straightforward action plan, you won’t have any trouble with following through. Knowing where to start is always the most important step. New Forex traders tend to be impatient and rush into making major decisions with minor knowledge. That is the reason why more than half of beginners usually get quickly discouraged and end up failing altogether. The key to successful trading is to understand every important aspect before applying your knowledge in the conditions of live market. As you go through some of the basic Forex terminology, you will soon come across the mention of charts and the importance of chart reading skills. Today we will briefly discuss the significance of charts in currency trading and find out how to read Forex charts like a pro.
When it comes to answering the question how to read Forex charts beginners often get confused. The main reason for that is that the graphs themselves can seem hard to navigate for those who have never dealt with them before. But luckily, just like any other aspect of currency exchange market, chart reading can be systemized and broken down into simple steps. Moreover, the more you look at the chart analysis in the future the clearer they will appear to you. That can be a good indicator for the trader’s level of expertise: as soon as they know how to read Forex charts like a pro their trades will be pro level as well.
Now, let’s get a little more technical. There are three main types of charts in Forex: candlestick, line and bar. You do not need to identify the best kind for yourself as they all prove equally effective. The real difference is the way information is displayed: depending on trader’s preferred style of processing data they might favour one chart style to another. Most how to read Forex charts beginners PDF manuals will start with the candlestick charts. The main thing to know about candles in Forex is whether the one you are looking at is bullish or bearish. The bullish candles are presented in a form of outlined shapes and appear on the chart when closing price is above the opening value. And the bearish ones are filled in with color and show up in the opposite scenario: when opening price is higher than closing one. Once you are comfortable with noticing the type of the candle and comprehending its meaning you will be able to navigate through various charts easily.
The bar chart can slightly resemble the candlesticks but operates differently. The bars look like vertical lines of various lengths with horizontal markings at the top and bottom. Each bar represents a selected time period and the markings indicate the highest and lowest values during that time. The positions of the bars compared to each other form a trend: for example, if several bars are positioned one higher than other it indicates the increase of the rate overall. Same as with the candlesticks, reading bar charts is not over complicated as long as you know the basics and pay close attention.
Unlike candle and bar graphs, when reading the line chart, the trader will look at the chart as a whole, rather than at separate elements. It is very simple: built from the closing values of selected currencies the line on the chart will represent trends in selected time periods. Pro tip: for fuller picture you might want to increase the time frame to see the movement of the line on a larger scale. Because of the chart’s generalizing nature it is always a great idea to use it in combination with other chart types. There are also a few variations of using the line chart that you will surely start using once you get a little more familiar with Forex.
As mentioned before, learning to trade might take up some time, so be prepared to stay focused and remember as much as possible. Also feel free to try various learning materials when it comes to complex technical info. Because if for some traders how to read Forex charts PDF book is enough, others might want to see the chart reading in action and maybe even practice themselves. The good news is that dozens of options exist for new Forex traders when it comes to learning: from videos and podcasts, to live lessons and blogs from market experts. The most important thing is to feel in control at all times. No matter if you are sourcing your knowledge from how to read Forex charts PDF manual or from a ten minute video, always try to make sure that you understand exactly what’s written or said. Because Forex is the place where lack of knowledge can cause the loss of actual money. Always keep in mind that taking your time in understanding every small detail will play a great role in your future success, and disregarding your own success is the last thing you would want to do.
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