Forex
Charts - How to Read a Currency Chart
Forex charts are
easy to interpret, especially for someone that has invested in or day
traded stocks before. When looking at a real time chart of a stock,
the trader has to select the chart period (1 day, 5 minutes, 15 minutes,
etc.) and the ticker symbol of the desired stock. The concept is the
same for a currency chart. The trader would select the specific currency
pair (U.S. Dollar versus the Japanese Yen, the Euro versus the Dollar,
etc.) and the desired time period for each bar of the forex chart. The
example below shows a snapshot of a real time 15-minute candlestick
chart of the Euro versus the U.S. Dollar (EUR/USD) currency pair taken
from our forex day trading system (this system can be used to obtain
free forex charts for 30 days and also
to practice day trading).
NOTE: Information on FX charting will be provided during our free, live forex training.
On the day above
(December 2, 2002), the forex chart shows a strong move in the Euro
versus the dollar, from a low of 0.9869 (about 8:30AM EST) to 0.9975.
This is a difference of 0.0106 or 106 pips (in forex trading, a "pip"
is the smallest tick in the price of a currency, which is similar to
a "tick" in stocks). In dollars, this move is equivalent to
an amount of US$1,060 per lot. In our forex trading system, currencies
are traded in lots of 100,000 (100,000 x 0.0106 = $1,060). With a margin
requirement of only $1,000 per lot, this corresponds to a return of
over 100%. In other words, while a move from 0.9869 to 0.9975 is only
about 1%, with 100 to 1 margin this return becomes over 100% (Please Note: Increasing leverage increases risk; in this example, a move of 1% in the other direction could have resulted in a loss of the same magnitude). In our
forex education section we also explain
how to read a forex quote and other currency
trading basics.
More
Currency Charts
If you were to look
at the forex chart below without knowing that it was a currency chart,
you might have thought that it was a chart of a 124 dollar stock. The
snapshot of the real time forex chart below shows the relationship between
the U.S. Dollar and the Japanese Yen for a three month period. Each
candle represents one day of price activity, with the last candle on
the forex chart showing the current value of the dollar versus the yen
(124.50 yen). Consequently, an investor that day trades stocks can easily
adapt to forex charts. If he feels that the dollar will go up, he simply
buys. Then, for the sake of simplicity, let's say that the candles on his chart start moving up (e.g., 125.00, 125.25, 126.10,
etc.). This means his balance is positive.
Notice that four
lines of different colors are superimposed on the forex chart shown
above. These lines are what are known in technical analysis as "moving
averages," arithmetic averages of the price of the currency pair
over a certain number of periods. The moving averages shown on the currency
chart above are 10-day, 20-day, 50-day, and 200-day moving averages.
Day trading currencies mainly involves the application and interpretation
of technical analysis on real time forex charts, just like day trading
stocks involves applying technical analysis to real time stock charts.
Free
Forex Charts
If you are a trader,
by now you have probably realized that currency charts are really no
different than stock charts. Once you understand how
to read forex quotes, you can begin to trade currencies by applying
technical analysis to different currency charts. One of the advantages
of trading currencies over stocks is that you only have a few major
currencies to trade rather than tens of thousands of stocks. Thus, it
is a lot simpler.
To get access to
free forex real time charts, you can sign up for free access to our
real life forex trading simulator. This simulator will not only let
you play with different currency charts in real time, but it will also
allow you to practice executing buy and sell orders at actual prices.
The award-winning forex trading system is the best way for you to learn
forex day trading. Pulling up currency charts is very easy. Try it for
free.
Click
here to sign up and get access to forex charts - free currency charts
and trading practice for 30 days
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