Trading Forex
Many investors in recent years have decided to branch out and venture into the foreign exchange market as a way to diversify their investment strategies, and bring in extra profits. If you’ve been thinking about investing in the Forex market, there are several concepts that you have to understand before you can have a realistic chance of being successful. If you are familiar with other financial markets, there are some definite parallels between those and Forex. Forex trading charts are similar to what you’ll find with any other market, but it is essential to understand them if you’re going to have a chance of making money. Here are a few things to know about Forex trading charts.
Forex Trading Software
Forex- Trading Foreign Currencies(Flickr.com)
In the Forex market, there are many different charting programs that you could use to check in on the market. The most popular platform that is available anywhere is Metatrader, more specifically, Metatrader 4. This is pretty much the industry standard in the Forex market. Almost every broker offers Metatrader 4 to their customers. Most of them also have their own proprietary software that you can use instead, but Metatrader is usually always an option. It’s a pretty intuitive program to use, and most traders should have no problems picking it up in a short period of time.
When using Metatrader, up in the top-left corner of the screen you’ll see all of the currency pairs listed with price quotes beside them. If you want to open a chart, you can right-click on one of the currency pairs and then select “New Chart.” You can arrange the charts on the screen to the right by dragging them, or there are several alignment options that you can choose from.
Forex Trading- Time Frames
When you open a Forex Trading Software chart, you have the option of looking at it in many different time frames. For example, you can choose to specify that the chart is displayed in a one minute, five minute or fifteen minute time frame. You could also choose a one hour, four hour, daily or monthly chart. While you will be looking at the same price data, it will look different, depending on what chart you look at. If you’re looking at the one minute chart, it could show an obvious trend going up. However, if you look at the data on the monthly chart, the clear long-term trend may be downward. Because of this, you have to choose the proper chart time frame for your trading strategy. If you are using a long-term trading strategy, it doesn’t make sense to look at the short-term charts when making your investment decisions.
Forex Trading Indicators
Most traders in the Forex market use technical analysis as a way to determine when to get into the market. In order to engage in technical analysis, you will probably want to use some indicators on the chart. If you are using the Metatrader platform, there are a number of the most popular indicators built right into the program. Up at the top of the page, you’ll notice a menu option called “Tools.” Select that and then pick the “Indicators” option. From there, you can pick between indicators like the MACD, Bollinger Bands, Moving Averages and other popular trading indicators. Once you make your selection, it will put the indicator right on your selected chart. You may want to change some of the options on the indicator, depending on your preferences.
Trading From the Chart Software
Once you have identified a trading opportunity on your Forex chart software, you can place your trade directly from there. Simply right-click on the chart, and a pop-up menu will appear. You can then choose to place a buy or sell order. When you placed the order, another box will open up that allows you to specify your take profit or stop loss values. You can choose to place a stop loss or take profit at a certain pip level away from the current price, or you can enter a specific price in which to close out the trade.
If you are not comfortable with Forex charts, you can open a demo account and download a free copy of the Forex Trading Software from a Forex broker before you start investing your real money. You can play around with the various charting options and then do the same thing with a real account when you get comfortable.
See Also:
What are you really selling or buying in the currency market?
Do You Know Your Currency Pairs?
Elliott Wave Forex Trading Video: It’s Not The News That Matters
Forex – A Snappy Way To Make Serious Bucks
What Should You Know About Forex Investing
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