Trading the FX markets can be fun as well as profitable.
For those of you that would like to spend time and find out a little more about the markets. the charts and some of the best known indicators, then this section is for you!The currency pair
Every currency pair is quoted against the unit of 1 for the the first currency mentioned e.g. GBP / USD and a rate of 1.3000 means that for every 1 pound the market rate is 1.30 US dollars. For the USD/CHFand a rate of 0.9950 means that for every 1 US Dollar the market rate is 0.9950 of a Swiss Franc.
In general prices are quoted to the 4th decimal and this is regarded as one pip! Therefore, a move in the GBP/USD rate from 1.3000 to 1.31000 (or one cent) is a move of 100 pips. This is why the price per pip is so important.Support & resistance
When you start to look at charts, one aspect you can very quickly identify are level of support and resistance. What this means is that over time some currency pairs clearly display a price level , which acts as a barrier against the price moving lower as part of a down trend or moving higher when part of an upward trend. Whilst support and restistance levels cannot always be relied upon, when looking at the wider picture and considering other aspects of technical analysis they can be a good sign of where to place stop loss or take profit positions.Candlesticks
If you are going to look at charts, make sure you load Bar Candlestick charts as these can tell you alot about the current and historic price movements Look at the chart below:
You are clearly see the difference between a standard chart and a candlestick chart. The candlesick chart gives lots of information, but the one thing it will not tell you is how the price moved from the opening to the closing of the candle. But this aside, it is one of the most useful tools when looking at charts to determine future price moves.
The detailed candlestick chart shows two candles, one blue and one red. Usually the blue colour indicates a rise in price / vaule over the period of time represented by the candle. A red coloured candlestick usually represents a falling price or value. So you can very quickly determine whether a recent trend is moving higher or lower.
But each individual candle provides so much more information as follows:
- it has an opening price
- the high of the period (the top of the upper wick)
- the low of the period (the low of the lower wick)
- the closing price for the period
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for lots more information on how to trade the Forex markets as well as detailed reviews of various Forex signals services and many more things to do with Forex.