When learning to read forex charts, remember that there are two basic approaches for online forex trading. They are fundamental analysis and technical analysis. Fundamental analysis doesn’t rely on forex charts. It uses both political and economic factors to help determine trades. Charts here are only used as a reference. Technical analysis on the other hand will try to predict where the prices are going by analysis of historical price activity. Those who use technical analysis study the relationship between price and time.
The most traded pair of currencies is the Euro and the US dollar, so we will use them in our example. The dollar is on the right hand side of the chart and the Euro is on the left hand side. The currencies are expressed in relationship to each other in pairing. Forex charges will always display how much of the currency on the right hand side is necessary to buy a unit of the currency on the left hand side. Looking at the chart you will notice the last price displayed on a given date. This number is always highlighted. The time is recorded horizontally across the bottom of a chart and the price scale is displayed vertically along the right hand edge of the chart. The time and the price are often in all caps to help the trader remember that technical analysis is about the relationship between time and price. That is a fundamental rule of this type of relationship.
There are many ways to observe the price and time movement on a chart. These include bars, lines, point and figure, and Japanese candle sticks, the most popular method. With the candlestick method there is a fat, red section that is the body of the candlestick. Lines protrude from the top and bottom and they are the upper and lower wicks. When you look at al the candles on a chart it is clear that bodies can be difference sizes and sometimes there is no body at all. The same is true with wicks. Candle wicks can be of many difference sizes, or there may be no wick at all. The length of the body and the length of the wick are determined by the price range for the candle. Longer candles will have had more price movement during the time that they were open. The top of a candle wick is the highest price for that currency while the wick’s bottom is the lowest price. A candle or currency is bullish when the close of the candle is higher than the open. In English this means that there were more buyers than there were sales during the opening time period. Sometimes the candles will not have wicks. The price opened and it dropped off until it closed.
Forex charts are not a sure fire method, but they are a tool that can help a trader. Many forex traders use charts on a regular basis. Historical trends do have their place in forex trading as most traders will admit, and using the charts to track historical trends can assist a trader in making a decision today.
Often the charts are online rather than on paper. By joining a service that provides the charts via the internet a trader is able to stay very current indeed on currency activity. Charts can be checked on a minute to minute basis. For those who primarily do their trading based on historical accuracy this can be a true help. Most forex traders however use a combination of the two approaches. They may chart historical trends, but they will also pay close attention to political, cultural and economic events within a nation. They may also use charts or other methods to check and see if a particular political event as a recent historical parallel that can be checked to determine how the currency behaved in past times. Simply following a system usually is not enough. A trader should also be, somewhat at least, a student of history and of economics. Using all the tools at your disposal will make you a better and stronger forex trader.
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Showing posts with label forex traders. Show all posts
Showing posts with label forex traders. Show all posts
Wednesday
Try It Before You Buy It - Trying Out a Forex Demo Account
Trying out a forex demo account is a method used by literally thousands of potential forex traders and investors to determine if forex trading is truly for them. With a demo account, an interested person can go online and see exactly how an account would work. They are able to do the forex equivalent of the war games generals play in the Pentagon. Without investing and risking any real money the investor can pretend to have money in an account and make buys and sells the same way it would be done in reality. The software used for these demo accounts is very realistic, and generally a person is able to see at the end of the day if they would have lost or gained money if the transactions had been real.
It would work very simply. Let’s say an investor pretends to have a margin account with ten thousand dollars in it. He looks closely at the currency markets and believes that the dollar will go up in value against the yen. The demo account allows him to buy at a ten to one margin, so he buys (in the program) one hundred thousand dollars of dollars and sells one hundred thousand dollars of yen. There will be a spread, or difference, which amounts to the pretend profit.
Why would a person want to use one of these pretend demo accounts? The reason is found to be because it is always much safer to learn how to do this sort of thing without having actual money at risk. The same principle applies when kids in driver’s education classes sit in demonstrator modules that resemble real autos. They are able to practice driving without taking risk. They maintain heir safety while they build their skills, knowledge and confidence. Pilots follow this idea also by using flight simulators. You would never think of flying an airplane unless sufficient time had been spent in a flight simulator first. The same holds true for forex trading. Spending time with a demo account allows the potential trader to gain skills and learn the ins and outs of the game and the market place. A person is then able to see if they truly have the instincts necessary for the market and have sufficient knowledge to “play with the big boys.”
Most brokerage companies involved in forex trading have such demo accounts available, sometimes free and sometimes for a small fee. Even if a fee is paid, it is usually worth it because a forex trader can parlay his skills and knowledge into vast profits after spending some time practicing with the forex demo account. Generally checking with a broker can get a demo account set up quickly. A trader with an interest in setting up a forex demo account can also go online and find a vast array of companies ready, willing and able to help the student trader set up an account and enhance skills. Learning what you are doing is always smart, no matter what game you are playing, and forex trading can certainly be seen as an advanced financial game.
John Jackson is an example of a person who benefited from a forex demo account. After months of study of the forex market, Jackson was convinced that he could make a go of it as a day trader in the forex market. His wife however wasn’t convinced and was a little less risk inclined. Jackson went to a brokerage company online that he felt good about and trusted. He set up a demo forex account and began to make trades as though he were using real money. After several days, on paper, Jackson had made a consistent profit. As he learned and as his confidence increased he became even more anxious to open a real forex account and invest his money. His wife also saw how on paper he had made a nice profit and relaxed, taking away her objections. Today Jackson and his family do very well financially through forex trading, and his wife is confident that he will continue to do so. By using a demo account he was able to learn enough to go forward and open a true account and is an active trader today.
Forex Robots Reviewed
It would work very simply. Let’s say an investor pretends to have a margin account with ten thousand dollars in it. He looks closely at the currency markets and believes that the dollar will go up in value against the yen. The demo account allows him to buy at a ten to one margin, so he buys (in the program) one hundred thousand dollars of dollars and sells one hundred thousand dollars of yen. There will be a spread, or difference, which amounts to the pretend profit.
Why would a person want to use one of these pretend demo accounts? The reason is found to be because it is always much safer to learn how to do this sort of thing without having actual money at risk. The same principle applies when kids in driver’s education classes sit in demonstrator modules that resemble real autos. They are able to practice driving without taking risk. They maintain heir safety while they build their skills, knowledge and confidence. Pilots follow this idea also by using flight simulators. You would never think of flying an airplane unless sufficient time had been spent in a flight simulator first. The same holds true for forex trading. Spending time with a demo account allows the potential trader to gain skills and learn the ins and outs of the game and the market place. A person is then able to see if they truly have the instincts necessary for the market and have sufficient knowledge to “play with the big boys.”
Most brokerage companies involved in forex trading have such demo accounts available, sometimes free and sometimes for a small fee. Even if a fee is paid, it is usually worth it because a forex trader can parlay his skills and knowledge into vast profits after spending some time practicing with the forex demo account. Generally checking with a broker can get a demo account set up quickly. A trader with an interest in setting up a forex demo account can also go online and find a vast array of companies ready, willing and able to help the student trader set up an account and enhance skills. Learning what you are doing is always smart, no matter what game you are playing, and forex trading can certainly be seen as an advanced financial game.
John Jackson is an example of a person who benefited from a forex demo account. After months of study of the forex market, Jackson was convinced that he could make a go of it as a day trader in the forex market. His wife however wasn’t convinced and was a little less risk inclined. Jackson went to a brokerage company online that he felt good about and trusted. He set up a demo forex account and began to make trades as though he were using real money. After several days, on paper, Jackson had made a consistent profit. As he learned and as his confidence increased he became even more anxious to open a real forex account and invest his money. His wife also saw how on paper he had made a nice profit and relaxed, taking away her objections. Today Jackson and his family do very well financially through forex trading, and his wife is confident that he will continue to do so. By using a demo account he was able to learn enough to go forward and open a true account and is an active trader today.
Forex Robots Reviewed
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