> Currency Trading Charts - How Imperative Forex Trading Charts Really Are

Currency Trading Charts - How Imperative Forex Trading Charts Really Are

Posted on Thursday, December 27, 2012 | 1 Comment

In Forex or foreign exchange trading, there are two main ways of analyzing markets and predicting trends. These are fundamental analysis and technical analysis. Some prefer a person and some the other, but equally have their contribution for making.

Fundamental analysis involves studying all the info about a particular country that could have any bearing on the movements of that country's currency. These include the various leading and lagging economic indicators, political events and even climatic events such as hurricanes or earthquakes. A single aspect of fundamental analysis that some traders use is a practice known as forex news trading. This suggests creating a trade immediately when a major news announcement that's relevant to a country's economy. The logic is that there are likely to be major rises or falls in a country's currency while in the immediate aftermath of such an announcement, and its possible to do this due to the fact the foreign exchange markets do not ever close. This method of trading has the prospective for huge profits, but also carries huge risks.


The other main type of analysis, technical analysis, mostly relies on the use of currency trading charts, and is based on the assumption that currency prices move in trends. The ability to recognize and predict trends is essential for success in Forex trading. The most popular types of chart used are Bar charts and Candlestick charts. The Bar chart consists of a vertical line representing a time period - usually a day - and is designed to provide four specific pieces of material: the highest and lowest prices that were reached during the period, and the opening and closing prices. Candlestick charts deliver a similar four pieces of specifics, but in a way that a lot of us find may make it easier to see at a glance what the markets are undertaking.

A single crucial function of charts is always to indicate support and resistance levels. Support may be the price level at which demand seems to be strong enough to prevent the price falling further, and resistance would be the price level at which selling, and thus supply, seems to be sufficiently strong to prevent the price from rising further. These can be indicated by horizontal lines at the lowest and highest points on the bar chart.

Although currency trading charts are used mainly in technical analysis, they can also be useful in fundamental analysis. A chart can make it much easier to identify the effect of a particular event on a currency's prices and its performance from the short and longer term. Learning to use charts to analyze markets and trends is mostly a steep learning curve, but it really is an essential aspect of success in Forex trading.

Comments:1

  1. Hi, maybe the orginal article is here: http://www.forextradingbeginners.info/forex-technical-analysis-basics-and-fundamental-forex-beginner-guide.html
    Please add your source.

    ReplyDelete

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