Trading Forex According To The Charts

Forex charts is one of the most important trading instruments in online trading, whether you are trading futures, shares, indices or Forex. For many traders Forex charts is a key to successful trading as they build their whole Forex trading strategy basing on the information that they get from the charts only. You can know a lot from a simple chart for a certain currency pair: historical movements, past and present quotes, trends and suggest the future trends. But before you start trading using the charts, you need to learn and practice in order to understand them.

Reading the charts is called a technical analysis. In general there are two types of the analysis: technical and fundamental. While technical is concentrated on the charts, fundamental is based on the world economical events and financial news. There are traders who trade using only one of the analysis types, but there also traders who concentrate their attention on both technical and fundamental analysis in order to have the full information about the certain currency pairs that they trade with. In this article we will give you an introduction to the charts trading.

In order to start you will need a demo trading account. Almost all Forex trading brokers provide their traders with a free demo account where you can practice your trading skills using the real quotes and graphs. When you register for a demo account you can choose few currency pairs’ charts that you will watch and practice on. We recommend you to start with the currency pairs that include USD, for example EUR/USD, USD/JPY, USD/SGD, etc. The USD currency pairs are the most active and have lower spreads. Besides it is much better if you trade with only few currency pairs and watch their movements. When you know what moves these currencies and how they react on different factors it will be easier for you to predict their directions. Most all professional traders stick to a few currency pairs and trade with them only.

You can set your chart for different time frames according to your trading strategy. The usual time frames that charts offer are from 1 min to a week. Means that each candle stick that you see in the chart is creating during the time frame you set. So if you have an hour of your free time to practice your trading, we recommend you to set your chart on a 5 min time frame, so every 5 min when the last candle stick completes you will be able to make a decision regarding your trading. But we recommend using the little time frames like up to 1 hour for practice purpose only. Most of the professional traders use 1 day time frame or even 1 week targeting for the long term trading. The long term trading is more accurate and has more chances for brining you good profit. But on the other side the long term and high time frame of your chart demand higher investments and big margin.