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Forex live chart is a necessity if you are planning to do your own market analysis. ‘Live’ here means the service that provide it will use current actual market data to create the chart. Basically, it is a very useful information tool to have even if you don’t do your own analysis.
The first step is to choose the currency pair to analyze from the drop down menu or other interface. 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. After you pick the type, select a time frame; it can be five minutes, fifteen minutes, weekly, etc.
In a bar chart, each vertical bar that you see represents a time frame. The top of the bar is the highest price and the bottom of the bar is the lowest price during that particular time frame. For each vertical bar, there are two horizontal bars, one to the left and the other to the right. The left bar represent the opening price and the right bar represent the closing price for that time frame. Tips: Use the zoom function to see it clearly.
If you are going to use forex live chart, you should at least know these things:
Understanding Support and Resistance
The market volatility can bring it anywhere and no one can predict it 100%. 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.
Entry and exit point can be decided based on these support and resistance data. A conservative method is buying at support and sells at resistance. More advanced strategies like sell at higher price or buying at resistance breakout are also applicable; you just need the right time, currency pair, and trading system.
Note: A time when the price has moved passed support or resistance line is called breakout.
Indicators
A good chart software also allows you 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
A lot of trader use forex live chart to do back testing for their system. They run their system based on data in the chart for previous one or two years to see if it is profitable system or not. What usually happen is when the system doesn’t works well, they adjust it so it can make profitable orders from that data.
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.
About the Author:
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.
Article Source: ArticlesBase.com – Forex Live Chart – Learn To Use Charts
FOREX TRADING: August 12 2009 Tokyo, Review of Trades in Live Trade Room-London Session
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