How to Read Forex Chart for Beginner Traders
Forex charts are used to illustrate the forex price movement of a forex instrument. This forex price movement is plotted on a forex chart and traders can analyze the forex chart patterns on the forex chart so as to determine when to open a buy forex trade or a sell forex trade.
Forex trading charts can be used by traders to gain a better understanding of the forex price movement based on analyzing past forex price data - this forex price data analysis is then used by forex technical analysis traders to predict the next likely future forex price direction.
How to Get Forex Charts
Forex charts are provided for on the forex trading softwares such as MT4 & MT5 platforms.
To get forex charts on MT4 & MT5 platforms:
MetaTrader 4 - To display the forex chart on MT4 platform follow the step below:
- Go to the Market Watch on the Top Right of the MetaTrader 4 Platform
- Select The Forex Instrument that you want to trade
- Right Click on this Forex Instrument
- From the Pop Up Menu Select Open Forex Chart option to open the forex chart on MetaTrader 4
MetaTrader 5 - To display the forex chart on the MT5 platform follow the step below:
- Go to the Market Watch on the Top Right of the MT5 Platform
- Select The Forex Instrument that you want to trade
- Right Click on this Forex Instrument
- From the Pop Up Menu Select Open Forex Chart option to open the forex chart on MetaTrader 5
How to Interpret Forex Charts
Forex charts price movements can be analyzed using forex trend analysis & forex patterns technical analysis.
Forex trend analysis will determine if the forex prices are moving in an upward forex trend or a downwards forex trend.
Forex chart patterns will try to identify commonly repeating forex chart patterns so as to try and determine what is the next likely forex price direction based on the technical analysis of these commonly repeating price patterns.
The three most commonly used forex charts are:
Line Charts - forex line chart is a line connecting one closing forex price & the next. Line chart does not give much information about forex price movement compared to other forex chart types.
Bar Charts - forex bar charts show open, high, low and close of forex price - OHCL. Forex bar charts provide forex traders with a little more information than forex line charts.
Within the bar the opening price, the high price, the low price & closing price are represented.
The vertical line of a bar chart shows the forex price range for a particular forex price period the top of this vertical bar shows the high of the forex price while the bottom of this vertical bar shows the low of the forex price, two horizontal lines one to the left shows opening forex price and one on the right shows the closing forex price.
Candle Charts - forex candlestick charts show the opening forex price, the high forex price, the low forex price & the closing forex price.
The opening and closing price are used to detect when a forex candle is bullish or bearish.
Bullish forex candle is when the forex close price is higher than the forex open price.
Bearish forex candle is when forex close price is lower than the forex open price.
How to Read Forex Chart for Beginner Traders - How to Interpret Forex Charts
