Forex Trading Tips – The correct Way of Reading Forex Chart
March 11, 2009 by Kelvin
Filed under Forex Tips
The forex trading chart works like a map for a forex trader. It is almost impossible for anyone to trade forex without seeing a chart.
However, there are a lot of traders out there who do not know the correct way to read a forex chart. A forex trading chart is made up of several time frames as well different type of chart patterns.
Forex Tips #1: The correct way to read a forex trading chart is to start with the Daily chart, follow by the Hourly chart, follow by the 15 minutes chart and then lastly the 5 minutes chart. I seldom work with the 1 minute chart because there are always a lot of price action within the 1 minute chart that will provide you with a false signals.
Forex Tips #2: The significance of a price is determined by the timeframe. The higher the timeframe, the more significance is the price action. There are time where there will be some conflict in the price movement. For example, you may be seeing a uptrend on the 60 minutes chart but when you switch to the 5 minutes chart, you may be seeing a downtrend. This is because a candle in the 60 minutes chart is made up 15 candles in the 5 minutes chart. However, you must take note that the analysis you get from the higher timeframe will be more significance than the analysis you get from the lower timeframe chart.
Forex Tips #3: The higher timeframe forex charts like the daily and hourly charts are mainly used for the determining of trend. Once you have established the direction of a trend and then decided to go long or short, you should then move on to the lower timeframe forex charts to help you look for the best entry point.
These 3 forex trading tips stated above are what I have been doing and have greatly benefitted from it.
To Our Currency Trading Success!
P.S. Here are my weekly forex trading signals, hope that it can help you profit from your trade.
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