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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. Actually, it is a very handy tool to have even if you don't do your own market analysis.

First of all, you have to pick the currency pair that you want to analyze; it usually comes in the form of a drop down menu. 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 bar at the top is the top price and the bar at the bottom is the bottom price for that specific time frame. There are two horizontal bars for each vertical one; one on the left side and one on the right side. The left bar represent the opening price and the right bar represent the closing price for that time frame. Note: Utilize the zoom feature to see it in detail. Usually, charting is a standard feature in a trading platform, read more about it at forex trading platforms.

If you are going to use forex live chart, you should at least know these things:

About Support and Resistance
The market volatility can bring it anywhere and no one can predict it 100%. But based on historical data, there are some condition where the price doesn’t exceed or below a certain price for a period of time.
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.

These support and resistance data can be used to decide entry point. A conservative method is buying at support and sells at resistance. There is also more advanced strategy such as buying at resistance breakout and sell at higher price; it is all depend on the currency, circumstances, and your trading system.
Note: Breakout is when the price move through the support or resistance line.
Today, there are various easier ways to decide entry point, read about it at forex trading signals.

 

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. Using a dummy account is a good idea for this test.

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. If you interesting to know more about forex trading, visit learn currency trading.

 

Tags: basic, Forex Live Chart