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How to Read Forex Charts

By Edited Apr 9, 2016 0 0

Reading a Forex chart is very simple when you know exactly what to look at. It can be daunting at first as it is very difficult to tell exactly how much money you might make or might lose in any particular situation. You want to take a look at the price and understand how it moves and what that does to the position you are planning to take. This requires a careful understanding of how pets relate to your profits and how you can use this in order to benefit with your trading strategies.

First of all you require a basic understanding of pips. Pips are a lot like points or dollars when it comes to trading stocks. The difference with pips is that they are traded on leverage so a single path might cost a completely different value based on the size of the lot which your trading. If you're trading a single lot that is worth exactly $10 on the EUR/USD. In order to remember exactly how much of it is worth, just multiply the counter currency by 10 for each single lot you are trading. If you are trading mini lots, then multiply the value by one.

It can be confusing at first if you're trading on a foreign currency. I recommended beginners start by trading a counter currency that their account is based in. So for American traitors, that would be pairs such as the EUR/USD or the GBP/USD. This'll make a tremendously easier to calculate what your profit and loss is. Stay away from complex and exotic pairs when you start off. These pairs are not only more difficult to track but they can also be more difficult to get a good spread on.

Now that you understand how pips work, you need to get a solid grasp of exactly how the chart works and how you can read it. It is very simple. The price simply moves up and down to follow what ever it is you're. Just remember that what ever the base currency of the pair you are trading is, that is what is going up when you see the chart going up. When you see the chart going down, that means that the base currency is going down against the counter currency.

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