Learn to Read Forex Charts Like a Pro

Forex trading or foreign exchange trading is the business where the currency of one country is traded with that of another for profit by financial institutions, banks, corporates and also by individual investors. Forex charts are an invaluable market information tool for all traders and investors and help in making the right investment decision to obtain the desired profit. 

While analyzing forex charts, you must observe some predefined guidelines for the desired effect. It is important for you to trade with popular currency pairs and for this you must learn the market’s basic elements. Since currency pairs are quoted similarly, their tag names will also remain same. The rudimentary function of this chart is to make sure the currency pair moves up the ladder as this is the only way to make a profit.  

You can also use forex charts to analyze time frames as various trading platforms use different time zones, single or multiple, depending on the specific area or region. Most charts display the bid price rather than the asking price but remember you always purchase the currency at the asking price and sell at the bid price. Forex charts are also used to assess the entry and exit of any given currency pair, so you should be able to figure out the chart prices for the pair you are investing or trading in.

Always note that a forex chart displays the currency value at its right and you should purchase the currency displayed on the left. ‘Japanese candle sticks’ approach is a common and popular way to watch price movement on the chart for a particular currency pair during a given time frame. The wick represents the price range and hence the tip of the candle wick represents the currency’s highest price. Some other forex charts are line and bar charts.