Forex Live Chart - What You Need To Know About Charts
If you have interest to learn market analysis, you will need an access to a forex live chart. 'Live' here means the service that provide it will use current actual market data to create the chart. Actually, it is a very handy tool to have even if you don't do your own market analysis.
First of all, you have to pick the currency pair that you want to analyze; it usually comes in the form of a drop down menu. After you find the one you want, select the chart type, it usually comes in 4 forms: Line, Bar, Candlestick, and Table. If you are a beginner, I suggest start with a Bar type. Once you select the type, choose a time frame such as one minute, five minutes, daily, weekly, etc.
In a bar chart, each vertical bar that you see represents a time frame. The bar at the top is the top price and the bar at the bottom is the bottom price for that specific time frame. There are two horizontal bars for each vertical one; one on the left side and one on the right side. The left bar represent the opening price and the right bar represent the closing price for that time frame. Note: Utilize the zoom feature to see it in detail.
There are some things that you need to know when using forex live chart:
About Support and Resistance
The market movement is unpredictable and it can goes anywhere at any time. But we can get the information from historical data that there are a period of time where the price doesn't goes higher or lower from a specific price.
Example:
-From July to December, the EUR/USD prices never exceed 1.645, that means 1.645 is the resistance for EUR/USD during that period.
- From January to May, the USD/JPY prices never fall below 90.070, that mean 90.70 is the support for USD/JPY during that period.
These support and resistance data can be used to decide entry point. A conservative method is buying at support and sells at resistance. There is also more advanced strategy such as buying at resistance breakout and sell at higher price; it is all depend on the currency, circumstances, and your trading system.
Note: A time when the price has moved passed support or resistance line is called breakout.
Indicators
A good charting tool will at least have the feature to add various indicators. Indicator is a mathematical calculation based on prices that can be used to help you make decision. For example: MVA indicator can show you the average price for a certain period, EMA show you the weighted price calculation for a certain period, etc.
Back Testing
Most experienced traders are utilizing forex live chart to perform backtesting in order to test their trading systems. They test their systems against the chart data on a specific period of time and see if the system is profitable or not. The common problem with this is when they found that it doesn’t works, they tweaking the system so it can match the data and always create profitable transaction.
That is a very fatal choice; most of the time the systems will not holds long against the actual current market movement. Back testing is good and you definitely can use the chart for that, but you also need to test the system in the current market for at least two or three months before decide that it is works or not. Utilizing a practice account for this test is recommended.
Forex live chart can be used in various other ways to support a trader and understanding the basic function is a good start for your trader career.
As a trader, Matthew Johnson know how important to start with small steps in learning. Find his finding about the study process at learn currency trading; visit best trading system for a list of tested trading systems that work.
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