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Forex Charts



Those who are accustomed to trading forex on a regular basis will know just how volatile a market it can be. The market behaviour currency pairings can be difficult to predict, not least because so many factors influence the value of currency.

Forex charts (or FX charts) are tools of the trade which display a variety of information such as:

  • The current exchange rate between different currencies

  • The past market behaviour of any given pairing

  • Close, open, low and high price for a certain period (candlestick charts only)
    • As such, forex charts are incredibly useful to those who wish to invest in the forex market, and can provide significant information regarding all the available currency pairings.

What Are the Different Types of Forex Charts?

The three main types of forex charts are line, bar and candlestick. The most common and popular forex chart type is candlestick, as it displays far more information compared to the other two types of chart. With candlestick charts, you can view 'how' the currency pairing moved as opposed to just how much it moved by.

Forex live charts show currency values in the present, and often update every few seconds. These are used by forex traders to monitor the market and help inform their decisions in real time.

Part of an Effective Trading Strategy

Forex charts should be used as part of an effective trading strategy, as they provide essential market information which forex traders can use on a daily basis. Since forex is such a volatile market, it is necessary to know exactly how much currency pairings are changing in value, as well as what is causing the value to go up or down.

Whilst forex charts do not help explain the external factors which influence currency behaviour/value, they still provide useful insight into the precise effects these factors have on the value of any given pairing.

If, for instance, the pound were to sink against the euro as a result of a change in UK economic policy, a comprehensive forex chart will accurately show the extent to which the value went down, and how quickly. This can then be used to predict how currency will behave in similar situations in the future.

Indicators

Many FX charts also include indicators, which are used by traders to interpret the data presented on the chart. There are many different types of indicators which traders use, but two of the main ones include Bollinger Bands and the Relative Strength Index.

These allow traders to draw more data from a forex chart, expanding on the basic information that they display. Bollinger Bands, for instance, can be used to help determine whether a currency is overpriced or underpriced. With this in mind, it is well worth learning how each different indicator works and how the information can be applied to trading forex.

Ultimately, forex live charts and regular forex charts are incredibly useful tools which have become a necessity to forex traders. As a result, it is now possible to gain in depth knowledge of the forex market within seconds.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.18% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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