Forex traders have developed several methods for
attempting to figure out the direction of a currency pair. Fundamental
traders may read news sources such as DailyFX.com
to see how interest rates, economic growth, employment, inflation, and
political risk affect the supply and demand for currencies. Technical
traders use charting tools and indicators to identify trends and
important price points of where to enter and exit the market.
But no matter what type of trader you are, you'll need to learn how to read forex charts...
http://www.fxcm.co.uk/forex-basics/how-to-read-a-chart/
Opening a price chart
To get started, click on the ‘create marketshot’ button at the top of the trading station. Next, you need to pick a currency pair, select the period, and specify the data range.
The period is the time interval that the chart updates. For
example, a period set to one day (d1) means that each point on the chart
represents one trading day of data. A period set to five minutes (m5)
means that each point on the chart represents five minutes of data. The
data range is the amount of data you want the chart to populate. If you
want to look at a full year of data, you’d set the data range to one
year.
Using candlestick charts
The default chart type is called a ‘candlestick’ chart. This
chart type is used frequently in the forex market. A bar on a
candlestick chart shows the open, close, high and low prices for the
selected period. The body of the candle shows the open and close prices
where the wicks show the high and low prices.
If the closing price is higher than the opening price of the previous candle, then the candlestick will be blue. If instead the closing price is lower than the opening price of the previous candle, then the candlestick will be red. Candlesticks simply make it easier to see if the trading period ended up or down.
If the closing price is higher than the opening price of the previous candle, then the candlestick will be blue. If instead the closing price is lower than the opening price of the previous candle, then the candlestick will be red. Candlesticks simply make it easier to see if the trading period ended up or down.