By now you have an arsenal of weapons to use for when it’s time to battle the market.
And now, you will add yet another weapon to your collection: FOREX CHARTS!
Think of forex charts as a land mine detector because once you finish this blog, you will be able to use all forex charts and spot explosions on the charts before they even happen, potentially making you LOTS of money in the process.
But first things first…
In order to study how the price of a currency pair moves, you need some sort of way to look at its historical and current price behaviour.
And that brings me to the next question.
Have you heard of forex charts?
A chart, or more specifically, a price chart, is a visual representation of currency quotes over a period of time. Forex charts are extremely important for Forex traders, as they reveal how currency pairs have performed over a set period of time (whether it’s 10 minutes, 4 hours, a day, or a week).
No matter your preferred trading method, you’ll need to know how to read forex charts – there really is no escaping it.
Even though charts may seem somewhat of a sience at first glance, they’re really not that bad. They are user-friendly and it’s pretty easy to understand how price movements are presented over time since it’s all visual.
On the forex price charts, the y-axis (vertical axis) represents the price scale and the x-axis (horizontal axis) represents the time scale.
Prices are plotted from left to right across the x-axis. The most recent prices are plotted furthest to the right.
Fun Fact: Back in the day, forex charts were drawn by HAND!
Forex charts are your key to making it in the forex market.
Chart formations will help us spot conditions where the market is ready to break out.
And that’s the whole point. To spot big movements before they happen so that we can ride them out and rake in the cash.
After all, who doesn’t want to have a pool of cash to swim in?
But before we dig deeper into chart patterns, let’s look at the three most popular types of price charts that traders can use to monitor the forex market: