Learn basic skills in forex, such as how to read forex charts, is really important.

This is because once you have a very important skill under your belt, it will be much easier and quicker when the time comes for you to learn and practice an actual forex trading system.

By the time you finish this article, you will learn how to read forex charts and know the pitfalls that can occur when reading them, especially if you have not traded forex before.

First, let’s revise the basics of forex trading because it relates directly to how the forex charts Reade.

Each currency pair is always quoted in the same way. For example, the EURUSD currency pair is always as EURUSD, with the USD as the base currency, and the USD into the currency terms, not the other way with the first Rp. Therefore if the EURUSD chart indicates that current prices are fluctuating around 1.2155, this means that 1 EURO will buy around 1.2155 U.S. dollars.

And your trade size (face value) is the sum of base currency that you trade. In this example, if you want to buy 100 000 EURUSD, you buy a 100 000 Euros.

Now let’s look at 5 important steps on how to read forex charts:

1. If you buy a currency pair, ie, the length of your position, realize that you are looking for a chart that currency pair to go up, to make a profit on the trade. That is, you want the base currency to strengthen against currencies term.

On the other hand if you sell a currency pair to short positions, then you’re looking for a chart of currency pairs down, to make a profit. That is, you want the base currency to weaken against the currencies of terms.

Pretty simple so far.

2. Always check the time frame displayed. Many trading systems will use multiple time frames to determine trade entry. For example, the system can use 4-hour and 30 minute charts to determine the overall trend of the currency pair by using indicators such as MACD, momentum, or support and resistance lines, and then 5-minute chart to look up from a temporary dip to determine the entry the truth.

Thus ensuring that the chart you’re looking at a timeframe that is right for your analysis. The best way to do this is to set up your chart with time frames and indicators on them for your trading system, and to save and reuse this layout.

3. In the forex chart, it is the BID than asking price shown on the graph. Remember that the price is always quoted with bid and ask (or offer). For example, the current price of EURUSD may be 1.2055 bid and 1.2058 ask (or offer). When you buy, you buy at the ask, which is the higher of two prices in the spread, and when you sell, you sell at the bid, which is the lower of two prices.

If you use price charts to determine entry or exit, be aware that when you place an order to sell when the price graph is say 1.330, then this is the price you will sell, assuming no slippage.

If on the other hand, you place orders to buy when the price graph is the same price, then you’ll actually buy at 1.3333. A forex system will often determine whether your order will be placed only in accordance with the price chart or do you need to add a buffer when buying or selling.

Also note that on many platforms, when you place a stop order (to buy if the price rises above a certain price, or sell when the price falls below a certain price) you can select “stop if bid” or “stop if offered”.

4. Realize that the times displayed on the bottom of the forex chart is set for a particular time zone is set to chart forex providers, be it GMT, New York time, or time zone.

It’s handy to have a world clock available on your computer’s desktop to convert the different time zones. This is important when you are trading major economic announcements.

You will need to change the timing of the announcement to your local time, and time charts, so you’ll know when an announcement would happen, and therefore when you need to trade.

5. Finally, check whether the times on your forex charts according to when the candle opens or closes when the candle. Charting Your software may differ from others in this way.

The reason I mention this, is that if you need to trade major economic announcements, either by entering a business based on the movements that occur after the announcement, or to exit the trade before the announcement to avoid the stopped out during it, then you have the right ( for the minute!) as the trade is done in accordance with what is happening in the first minute immediately after the announcement, not a candle afterwards!

So there you have it.

You now have 5 important keys to how to properly read forex charts, which will help you to avoid common mistakes that many beginners make when looking at forex charts, and which will speed up your progress when you’re looking at forex charting packages, and forex trading systems that you want to trade!

Now that you know this, look at forex charts with exercises each 5 points in mind.

So get to it!