Want to know how to read forex charts? Once you learn the 5 key points to consider in reading forex charts It's easy to read.

In forex is very important to acquire basic skills, such as for example the reading of the charts. When you master these fundamental skills will make it easier and quicker to learn and practice an actual forex trading system. By the time you finish reading this article, you will know how to interpret forex charts and also know how to avoid mistakes in interpretation, especially if you have never operated in the forex market. First let's review the basic concepts associated with an operation of forex because they relate directly

Each currency pair is always quoted in the same way. For example, in the EUR / USD (Euro Dollar), the Euro is always the base currency and the dollar quoted currency. Therefore, if the chart of EUR / USD indicates that the current price is fluctuating around 1.2155, this means that 1 EURO can buy $ 1.2155.

And the size of your transaction (nominal value) is the amount of the base currency you're trading. In this example, if you buy 100,000 EUR / USD, you'd be buying 100,000 EUROS.

Now see the 5 pointers for interpreting a forex chart:

Item 1

When you buy a currency pair and see the price chart, you will want prices to rise so that the operation will be profitable. That is, you expect the base currency will be strengthened with regard to the quote currency. Moreover, when you sell that pair and note prices graph, you want prices to fall so that the operation will be profitable. That is, you wait for the base currency to weaken over the quote currency.

So far it is very simple.

Item 2

Always check the time frame displayed. Many operating systems use multiple time imaging technique to determine the entry point for an operation. For example, a system may use the chart 4 hours and 30 minutes to determine the general trend of a currency pair by indicators such as MACD (Convergence / Divergence Moving Average), time or support and resistance lines, and then a 5 minute chart to try and find a raise from a temporary drop to determine the actual entry point. Therefore, make sure it is correct the time frame of the chart you are looking for analysis. To achieve the best would produce the graphic with the correct time frames and indicators for the system you are using in their operations and save them for reuse.

Item 3

In most forex charts, displays the purchase price (BID price or demand) rather than the selling price (ASK price or offer price). Remember that a price is always listed with a purchase price and a sale (or supply). For example, as the figure below, the current price of EUR / USD 1.4314 may be buying and selling 1.4317 (or supply). When you buy, you are buying to selling price is the higher of the two prices in the differential, and when you are selling, you are selling to the purchase price, which is the lowest price of the two prices. If you use the price chart to determine a point of entry or exit, keep in mind that when you open an order to sell when the price chart shows 1.4332 (according to the chart image above), remember that is the price you sell at assuming no slippage (slippage).

If on the other hand, you open an order to buy when the price graph is the same, you'd be buying at 1.4317. Generally, forex systems will determine whether his orders to be opened just as the price chart or if you need to add an amount expected to buy or sell. Also remember that on many platforms, when you're opening stop orders * (buy if the price rises above a certain level, or sell when price falls below a certain level) you can select the command "stop if bid" or "stop if offered", which allow you to buy or sell in a rising or falling market respectively.

Item 4

Note that the time indicated on the forex charts is set to the time zone of the broker or vendor-specific graphics either GMT (Greenwich Mean Time), New York or any other area.

It is handy to have a world clock available on the desktop of your computer to convert between different time zones. This is particularly important when operating during major economic news or announcements.

You need to make an announcement when your local time, and time of your chart, to know exactly when will this announcement and therefore when to operate.

Item 5

Finally, check the times on the same graphics, for example, along the bottom edge, correspond with the hours of opening or closing of the candles. Not all platforms exhibit hours in the same way.

If you are interested in "negotiating" economic announcements, either by running an operation based on the movements that occur after the announcement, or want to exit a trade before the announcement to keep your operation Perdiccas activate your order Limited (stop loss), which is why we mentioned this key 5.

Here we have the 5 essential keys to correctly interpret forex charts that help you avoid common mistakes which many forex beginners make when looking at charts.