Forex Charting Basics---Bars Versus Candlesticks
This Forex article is fairly simple regarding understanding charts that show you where a currency is trending,and how to use it as leverage to make intelligent moves currency investment wise.
Forex Chart: A Forex chart is a numeric guide that shows you currency prices and if they were up,down,stable or being very volatile and spiking up and down price wise.
Bars and Candlestick charts are the two most common types. A bar shows the price of a currency if it goes up or down and what it eventually closes at each trading day. Or where a currency trends at,at various times of the year.
Daily Charts: They represent a number of bars in a given day of trading a certain currency.
There are even shorter charts charts that specify even short periods of time in a given day of trading because certain currencies may be spiking more than others---or trending in time frames as short as 10 to 20 minutes.
Bars and Candlesticks:
Why these currency charts are vital to success with Forex trading
There are certain patterns currency wise which indicate where a currency will end up during the normal day of FX trading. So, educating yourself as a trader to see where the prices are trending helps you determine if a certain currency is being held longer periods;or people are losing faith in one and either selling or pairing totally different currencies.
You can even short a currency like you do when you buy a common stock, and wait until a currency spikes and trends downward,and starts going back up. If you and other traders can corner the market on a currency, and sell at a nice profit,you can do well as a trader.
This is not a Forex ploy I would do very often though. There may be legal issues involved.
But obviously you want to make a profit trading FX.
Bar Graphs:
A bar that is trending downward is considered a bearish type trend. These bars are red in color. This just means that what you closed at was lower than what you bought it at,at the opening.
Candlestick Graph:
Okay,next we have the good old candlestick bar. These are green in color and bullish. Meaning prices are going up and higher than what they started at. Even though this is basic numeric info on a certain currency, it gives you the exact info you require to make a decision to buy,sell or trade currencies.
What I suggest as well even for you the savvy FX trader;even if you’re not sure on whether to invest in a currency, is to do paper trades. Yes paper trades. Be your own FX analyst. Think about Hedge Funds and major mutual fund companies. They hire 100’s of analysts and they understand the markets more than an individual who buys common stock. You can’t beat them. You can’t.
Study currencies like crazy,and read articles from top FX traders as well.
Going back to what I was saying….
Paper Trades:
Do paper currency trades for a number of weeks before you plunge into the FX market. Actually, even if you are a great FX trader,continue doing paper trades. That way you have actual data of your own to refer to. Not just some top traders results. His results don’t parallel yours,so do the work you need to do to profit.
If you’re an emotional investor that’s worse,and why you have to do your homework FX wise. Study it like crazy,do paper trades,and even interview top traders. Do what you need to profit. Work harder than the next guy to get the information no one else is willing to get.
As well, when you start investing in FX, take small risks with money. Money you can afford to lose. And do what you need to educate yourself and get the info no other FX trader is willing to get.
Don’t blindly invest in FX.
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