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Forex trading is no child's play; hence you need to educate yourself well regarding this foreign exchange trading system before plunging in with your hard earned money. No transactions in the forex world are possible if you do not know how to read the charts. In fact this is one of the basic fundamentals which you need to master if you want to reap in rich rewards here.
Forex charts can look very complicated and confusing in the beginning; but once you have learnt the basics, you too can read and interpret it like a pro. These charts may not look the same always and varies according to the settings and options of your choice. You can individually set the price display style and also the time frame of your choice which can vary anywhere from one second to ten years. Prices are also displayed in various manners like a candlestick, line or bar depending on your preference.
Japanese candlesticks are the most common display style of prices in forex trading. These are simple colored indicators which display when the price goes up and when it is dipping. The candle displays a blue color when the prices are rising and going up and turns red as it moves to a lower price. There are two wicks for each candle which stands for the opening and the closing price of the currency pair. The other style of charts is the line chart which is relatively simpler than any others to read. These types of charts are usually calculated using the opening and closing value of a currency pair and then a line is drawn so as to join the two points. The disadvantage of the line chart is that it does not display all the information like a candlestick chart to help you make intelligent and informed trading decisions.
A bar chart is the third type of chart that can denote prices in a forex market. This one is actually quite similar to that of a candlestick chart except that bars are used to show the opening price, closing price and the direction in which the currency pair is headed. It is important to understand the basics of all these types before deciding which one you should follow for your trading decisions.
Most traders prefer using the candlestick chart because it displays all the necessary information regarding your currency pair and can also be set to any time frame of your choice. You can also make use of other settings like time length, number of ticks, price range and also the volume amount. Once you have chosen a time frame, then the candlestick will display the trading information for your currency pair during that time frame. And the best part is that since different colors are used to denote rise and low, you can quickly understand the situation at just one glance.
Forex charts are an integral part of forex trading and you need to learn how to read and interpret these in the right way to make rewarding financial decisions.
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Source by Scott Martin
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