Finding and reading up to date and relevant Forex charts can mean the difference between a successful trading enthusiast and a bankrupt trading enthusiast. Of course, the first step is getting proper educational courses through regular classes or online classes. This article will assume that the trader has had sufficient education, proper licensing and accreditation, and minimal experience. The article will therefore focus on tips and techniques for newbie traders.
Forex Charts: Continuing Education
Proper education is one thing; continuing education is another. The latter will allow you to maintain your competitive edge as against your seniors and juniors. Remember, continuing education must provide:
- Fundamental education and training: This can fill the gaps of your education and provide you with regular updates. Remember there are concepts you only fully grasp after some experience.
- Analysis and Theory: Analyzing different scenarios not only increase preparedness but also boost confidence. This is because you know that whatever happens you have a very big bag of tricks to keep yourself one or two steps ahead of the competition.
- Chart identification and reading: Old charts continually get updated with new data and from time to time are modified. If you want to stay ahead of the competition you need to be able to gather more data and get it faster than your competition.
Forex Charts: Reading Price Action
Reading the charts can be summed up in three words, practice, procedure, and measurement. Let us assume that you have performed your due diligence and have had adequate practice. Now you need to understand procedure and measurement:
- Procedure: Set the time frame. You can start with day trades and use 30-minute intervals on your intraday price charts.
- Measurement:You can use line charts, candlestick charts, bar charts, etc. The important thing is to know how to read these charts accurately and fast!
- Now you need to determine the line that constitutes your price support. This can be done by drawing a line across the price lows. Remember your line support identifies the point at which buyers have supported the price.
- Next you need to determine when prices have topped. This can be done by drawing a line across the highest points. This point symbolizes the threshold at which buyers have rallied support for the price.
- Determine the status quo by looking at your support line. Is it angled higher from left to right or is it erratically flat? If your line looks like the former this means there is an uptrend and if the line looks like the latter then this means that the particular currency is experiencing an uneventful trend in price.
Forex Charts: Planning Your Attack on the Market
Perform your due diligence and get information from as many varying sources as possible (i.e. news of the day, charts, expert opinions, retired brokers, indicative actions of bigger trading houses, etc.). Plan your entry, exit, or inactivity (stay put) based on a conglomeration of the information you got. But always, always, always have an exit strategy that allows you to break even or at least incur minimal losses. Now plan for your next play!