To perform an accurate technical analysis of the forex market, reading forex charts is an important skill. As a beginner, one should download free forex software in order to become familiar with the format and key data that are represented on such charts.
First, timing is everything. If your forex chart is set in a different time zone and you’re unaware of it, problems may result in your future currency trading. Check the time zone on the forex chart you are using, but then check to see whether the time stamp on the report matches the opening or the closing of the candle as this could also be important. Also, be sure that the time frames displayed are the same time frames you are using.
Once you’re viewing forex charts, you must understand how values and transactions are denoted in them. Each currency pair will always be listed the same way, which is to say with the base currency first and the terms currency second. For example, EURUSD will always show the first currency in terms of the second or 1 EURO for 1.2155 USD. The trade size equals the amount of base currency you want to trade.
Most forex charts list the bid price instead of the ask price, so make sure you factor this into your analysis correctly. A price is always quoted with a bid and an ask amount; you buy at the ask price and sell at the bid price.
Once you understand the basic terms and understand where all the pieces fit, you’re ready to use forex charts to perform a technical analysis of the currency trading market.