Some Basics of Reading Forex Charts

1. When you are buying a currency pair, you always want the currency pair to go upwards. When selling a currency pair, you always want the currency pair to go downwards.  This is how you make a profit.

2. Charts use different timeframes for listing entries.  It is a good idea to find one chart and only use this chart so you won’t make mistakes because you didn’t realize the timeframe difference. Always set up your Forex software or systems based on the same timeframe as the chart you use.

3.  Many charts will only list the bid price, even though you must buy at the ask price which is more expensive. Also, keep in mind that there is almost always going to be some slippage which occurs before your order is placed.  For example, you may place your order when the price is 1.2999 but actually, buy at 1.3004.

4.  Be aware of time zones when trading with foreign currencies.  Some factors that influence markets, such as financial reports, will occur at specific times.  You should have a world clock handy so you know when, for example, the German chancellor is going to announce the new economic plan.

5. See if the Forex charts are basing trades on the candle opening or candle closing. When you need to make a trade on a time-specific parameter, such as after an economic announcement, this can make a major difference.  You will want to make sure that the trades are happening at the moment after the announcement and not the candle after the fact.