For a long time, real estate was considered the perfect investment for private individuals. It was possible to create a passive income and due to the high demand for houses and flats, the value of one’s own property increased more and more. In the meantime, however, the real estate market has become so overloaded that it is almost impossible to find properties.
For this reason, more and more people are drawn to share trading. When you first set foot in the world of trading, however, the trading charts can be very confusing. In the following, we explain how to read and interpret forex charts.
What are Forex charts and quotes?
Getting started in currency trading is easy with charts. They provide information about the past price trend of the currency and allow forecasts about the coming direction. However, an unerring forecast is only possible if one understands the structure of forex charts, knows the different types of price charts, can understand the time frame for trading and is able to adjust the settings of the graphical display. Once you have familiarized yourself well, there is nothing to stop you from trading Binary Options, for example.
The time frame determines the time period applied to the price quotes. It is the foreign exchange dealer who selects the time period. The elements of the price chart – such as candlesticks, bars or dots in the line chart – are displayed there. The display of the price chart is set to this defined period. Since a single price element is displayed, the time frame is one of the most important factors in forex trading.
List of technical indicators
The list of technical indicators offers a wide range of trading indicators. For example, oscillators such as Stochastic Oscillator, Relative Strength Index, or the Commodity Channel Index are available. Trend indicators – Average Directional Index or Moving Average Convergence/Divergence – and price/price channels – such as Bollinger Bands, Donchian Channel or Keltner Channel – can also be selected.
Price and timescale
On the right edge of the forex trading chart is the price scale. Here you can read the current exchange rate. In addition, it shows the exchange rate from US dollars to euros. The market rate is displayed in two colours. If the line is green, it means that the rate has increased at that moment. Red means that the market rate has fallen. On the axis
Below the market rate is the timescale. It allows conclusions about the EUR value in the past. If you move the mouse over the line, the date is displayed.
Directly below the timescale, the time can be set. Thus, by clicking on “7D”, you can see the course of the past week. If you choose “6M”, you get the data of the last 6 months.
In the right corner of the screen, you will find the menu for adjusting the display of the scales. Possible display forms are percentage or logarithmic. The time and time zone can also be adjusted here.
Interpretation of the Forex charts
Once the principle of trading charts is understood, it is time for interpretation. The chart is influenced by various factors. It is essential to analyze the historical data and to read out regularities and patterns from this data. Once the cyclical nature is recognized, accurate predictions for the future can be made. But beware! Economic, political and social events must always be kept in view in order to forecast unforeseen changes and to be able to react to them accordingly!