The Importance of Charts in Forex Trading

Even though Forex trading can be a very lucrative way to invest, understanding what currency pairs to invest in, and when, takes some research for maximum profits. While there are several different ways to predict the movement of the value of this currency, most investment decisions ultimately involve using certain Forex charts for comparison. What these various charts do for you is show you how a particular Forex pair has performed historically. These charts will typically record several prices for specified timeframe. Normally you’ll be able to see high price, low price as well as average price for a specific currency as compared to others. Once you have this information, it makes it easier to make trades on possible future movement of the stock as predicted by these charts.

Be Sure Of the Timeframe

The other consideration when comparing any Forex charts is the timeframe. If you are an active trader who wants to make your trades quickly, you’ll want a chart with smaller intervals of updates. You’ll want a chart that shows you the price of the currency you’re considering in one minute or five minute intervals for a given day. This will help you spot times of the day when trends occur and help you exploit this movement in price with your trades. If you are longer-term investor, you’ll want to find charts that show a currency pair’s performance at wider intervals and you might only need the daily price of the currency over a month’s time to make your trades. Be sure that whatever chart you use that the timeframe matches your investing window of interest.

Check with Your Broker

Finding these Forex charts is easy and many brokers will provide them to you as part of their service. Once you open an account you should be able to view a chart for any period of time and adjust the timeframe to reveal the details you need. In addition to the basic Forex charts, many brokers also provide detailed analysis to predict when a great time to invest in a currency pair might be to realize the biggest profit. This involves applying complex comparison algorithms to the charts to find specific periods of volatility that you can exploit with a timely investment. By understanding how the currency pair has performed in the past, you can take advantage of similar price swings in the future.

Use Charts to Automate Your Trades

Many of the popular automated Forex trading programs also use these Forex charts to suggest their trades. They use historical data combined with real-time quotes to identify a profitable investment opportunity. They can also predict when to exit a position to maximize the profits. When investors do this manually they january sell a pair too soon and leave profit in the trades that the automated system would have recovered. If you allow these programs to make the trades for you, they can find a good opportunity, enter the position and exit again providing you with a profit from the trade.

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