The most important tool for the technical analysis in Forex trading at XTrade is the Forex chart. It helps in predicting the trends based on the previous movements of the currency and therefore acts as a useful device for the Forex traders for trading Forex. Just like it is important for the Forex traders to learn the basics of Forex trading, it is important to learn reading Forex charts as well. This is because once you have this vital skill under your belt, it gets easier to trade Forex and make predictions better using additional tools.
Understanding how to read Forex charts is important but it is also important to consider the following important things while reading charts-
Always check timeframes in your XTrade account
Ensure that you are looking into the correct timeframe for your Forex analysis at XTrade. Many trading systems use multiple timeframes in their charts and therefore you need to be aware of the timeframe you are using in the charts which should match your requirements.
Time zones for the charts
You should realize that the time displayed on the FX charts are set in the time zone of the Forex chart provider and therefore it is handy to have a World clock set on your computer in order to convert the time to your time zone. This is required at the time of an important economic announcement to be scheduled with your local time and the care has to be taken so that the opportunity is not skipped in this case.
Understanding the price trend
You need to understand the trend in prices through the Forex charts at XTrade. Also you should understand if there is a trend at all or there is a range bound in the market. If the support line drawn is angled high the left to right, then uptrend is safe to be assumed. If the line of support is flat, then currency is less likely to trade within a particular range.
Bid or Ask?
Most of the Forex charts show the BID prices and therefore you need to be careful when entering a trade because you will get the Ask price which is the bid price plus the spread offered by the broker.
There are several other things which you need to consider when reading the FX charts but the points described here are the most important ones. These will be helpful for you to avoid the common mistakes which many beginners make in looking at the charts. This helps in better understanding of the Forex charts and making the learning process at XTrade easier and smoother. There are few other important points also to consider while reading the charts and with the help of an experience Forex trader you can list out all of them and consider them while reading charts.