Forex Live Chart – Learn To Use Charts
If you have interest to learn market analysis, you will need an access to a forex live chart. This chart is created at once by using current market data, so you can have actual data on market movement during that period. Basically, it is a very useful information tool to have even if you don’t do your own analysis.
First of all, you have to pick the currency pair that you want to analyze; it usually comes in the form of a drop down menu. After you find the one you want, select the chart type, it usually comes in 4 forms: Line, Bar, Candlestick, and Table. If you are a beginner, I suggest start with a Bar type. Once you select the type, choose a time frame such as one minute, five minutes, daily, weekly, etc.
In a bar chart, each vertical bar that you see represents a time frame. The bar at the top is the top price and the bar at the bottom is the bottom price for that specific time frame. For each vertical bar, there are two horizontal bars, one to the left and the other to the right. The left bar represent the opening price and the right bar represent the closing price for that time frame. Note: Utilize the zoom feature to see it in detail. Usually, charting is a standard feature in a trading platform, read more about it at forex trading platforms.
If you are going to use forex live chart, you should at least know these things:
About Support and Resistance
The market volatility can bring it anywhere and no one can predict it 100%. But based on historical data, there are some condition where the price doesn’t exceed or below a certain price for a period of time.
Example:
-From July to December, the EUR/USD prices never exceed 1.645, that means 1.645 is the resistance for EUR/USD during that period.
- From January to May, the USD/JPY prices never fall below 90.070, that mean 90.70 is the support for USD/JPY during that period.
Entry and exit point can be decided based on these support and resistance data. A conservative method is buying at support and sells at resistance. More advanced strategies like sell at higher price or buying at resistance breakout are also applicable; you just need the right time, currency pair, and trading system.
Note: Breakout is when the price move through the support or resistance line.
Today, there are various easier ways to decide entry point, read about it at forex trading signals.
Indicators
A good chart software also allows you to add various indicators. Indicator is a mathematical calculation based on prices that can be used to help you make decision. For example: MVA indicator can show you the average price for a certain period, EMA show you the weighted price calculation for a certain period, etc.
Back Testing
Most experienced traders are utilizing forex live chart to perform backtesting in order to test their trading systems. They run their system based on data in the chart for previous one or two years to see if it is profitable system or not. The common problem with this is when they found that it doesn’t works, they tweaking the system so it can match the data and always create profitable transaction.
That is a very fatal choice; most of the time the systems will not holds long against the actual current market movement. Back testing is good and you definitely can use the chart for that, but you also need to test the system in the current market for at least two or three months before decide that it is works or not. Using a dummy account is a good idea for this test.
There are various ways to use a forex live chart in order to boost your trading and learning the basic of using it is a great beginning for your career as a trader. If you interesting to know more about forex trading, visit learn currency trading.
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Tags: basic, Forex Live Chart
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