Currency Trading Success Tips

By: Reggie Andersen
One of the prerequisites for succeeding in currency trading is to know, understand and read the various currency charts. Although going through text in reports, updates, etc. is important in order to understand market behavior, it can take considerable time to go through such literature before taking key decisions. This can cost a trader dearly in pressure situations.

In the fast paced world of currency trading, time is money and this is where currency charts play such an important role. Currency trading charts are far easier to interpret than text material and are useful in quickly bringing the user up to speed with the big picture. Some of the popular Currency trading charts include Bar charts and Candlestick charts.

Bar charts are commonly used for the purpose of technical analysis and the main reason for their popularity is that they are very easy to interpret and use. In a bar chart, the activities by the hour, day, week or month are observed on the vertical bar, whereas the horizontal marks are used to pin-point opening and closing prices.

Keeping the aforementioned axis in mind, a Trend Line is drawn within the bar chart to indicate changes in currency rate trends.

Here a descending trend line is used to connect the low prices of the day and if this line crosses the latest prices of the day, the bar chart generates a ï??buyï?? signal. Similarly, when an ascending trend line crosses the latest prices, the bar chart shows a ï??sellï?? signal.

Another popular type of chart used in currency trading is the Japanese Candlestick Chart. Candlestick charts are perhaps the most animated method of price movement observation. Although candlestick charts also display different states of online forex prices such as opening, closing, lows and highs etc just like other charts, the way that they show it is completely unique. It is because of this unique technique of showing price movements that Japanese candlesticks are often referred to as the sign language of the currency market.

Candlestick charts are especially useful when you donï??t have the time to sit and study a comprehensive chart, since they give you pertinent information about online forex currency movement, at a single glance. When the candlestick is red, it means that things arenï??t looking too good as far as currency price is concerned. Also, when you look at a candlestick chart, you will notice a line coming out from the top and bottom of the candlestick. These lines are the upper and lower wicks of the candle where the upper wick represents the highest price for the particular candle while the lower wick is just the opposite.

To conclude, we can understand the advantages and uses of charts in currency trading from the above mentioned description of currency charts and their applications. Such charts form the foundation of technical analysis which focuses on the price action of the market and the application of certain ï??pureï?? factors in order to determine the direction in which the market is headed.

This is why technical analysis is now perhaps one of the most widely accepted methods of scrutinizing the currency market. Thus in a nutshell and as mentioned before, anyone looking to find success with currency trading cannot do so without the use of currency charts.

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