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Forex Charts

Forex Charts as Religion

Forex Charts as Religion: The Opiate of the Masses?

Forex charting techniques are great tools for trading the currency markets. There is no doubt about that. No other financial market responds as faithfully to forex charts analysis.

The efficacy of certain forex charting techniques, such as Fibonacci Retracement Analysis and Bollinger Bands, is derived from mathematical principles that transcend the forex markets.

Other forex charting techniques are more obviously man-made measurements of particular aspects of the markets—the various momentum oscillators, for instance, are all measuring the same thing: the rate at which buying or selling is increasing or decreasing.

Many forex online traders “get religion” about forex charts once they see how understanding forex charting techniques can contribute to the bottom line of a forex account. But you must be careful to understand, too, a main reason why forex charts tell you so much:

Because millions of other people want to believe just like you.

Forex Charts as Self-Fulfilling Prophecy

The current state of the forex market as the 800,000 pound gorilla of the financial markets would not be possible without the Internet and all the interconnections that come with it. If you desire to learn more about forex or invest, it is important to know that the forex markets live and breathe information, as do the forex traders who make up the forex markets. This contributes to the reality of forex charts as a self-fulfilling prophecy, i.e. the market bounces off support because everyone sees that support on a chart and knows that the market is supposed to bounce off that support.

Especially in a more well-worn chart formation that is widely known and believed in, the self-fulfilling prophecy of forex charting techniques can make you a ton of money in the forex markets.

A doji on a candlestick chart, for example, is interpreted by chart-watching forex traders (and what other kind are there?) as a sign that a currency pair is facing a moment of indecision from buyers and sellers—which could lead to a reversal of an existing trend.

Everyone who trades that currency pair will see what doji just like you. When more people than not act on their teaching and buy the reversal, guess what?

Voila comes the reversal. Not for sure, but certainly it’s worth a trade.

Don't Let Forex Charts Make You Into a Sucker

Unfortunately, there are many forex traders who carry around their charts like a Bible, getting upset when the market doesn’t obey their precious patterns. This is a game for suckers and should not be engaged on by anyone who wants to make money.

Forex charts are a construct, a measuring stick—not a crystal ball, not a holy grail, not a Bible, not a hall pass, and not a license to drive a motor vehicle.

What’s more, forex pros habitually abuse newbie forex traders who believe that charts should work, therefore they will. For instance, if a currency pair breaks a key trend line, the action on the other side of the trend line will go red hot instantaneously, both from new traders piling into the trade and from traders who were wrong covering positions.

A forex pro may then “fade the break,” betting opposite to the teachings of charting wisdom. The forex markets have a funny habit of fiscally crucifying forex traders who make false idols out of forex charts.

Important Forex Information

The most important step in currency trading is finding the right broker; our forex experts can help. See our
reviews of forex brokers for more information.  arrow

It’s logical to assume that you can save some money using free forex charts rather than paying for a currency trading charting package. Find out the best free forex charts.  arrow

Few forex traders comprehend Fibonacci's pervasive influence on price behavior in the currency markets. Learn about Forex Fibonacci.  arrow

The obscure and esoteric terminology can be the most daunting part of learning to use forex charts. Read all about forex chart terminology.  arrow