Current language:  English  

Forex Charts

Forex Charts Confuse You

Three Tips to Conquer Forex Chart Confusion

It can be a sad moment when you first see a forex chart master in action. You will hear talk of Stochastics, Resistance, MACD, ADX, RSI, Fibonacci, and Elliott Wave.

More than likely, you will have no idea what this person is talking about. All their talk will, more than likely, sound like gibberish. Much of their talk, more than likely, will actually be gibberish.

But some of what such a forex chart master says will be true, insightful, and extremely profitable knowledge. The way to separate the wheat from the chaff is to gain a strong understanding of two or three forex chart systems for yourself.

No More Than Two Forex Chart Indicators Per Person, Please

The first thing you’ll want to do, if you’re in the forex chart confusion stage, is to pick one or two forex chart indicators and focus on those.

You have no shortage of options:

  1. Bollinger Bands
  2. Fibonacci Theory
  3. Simple Moving Average (SMA)
  4. Good Old-Fashioned Trend Lines
  5. Japanese Candlestick Charting
  6. Relative Strength Index (RSI)
  7. Stochastics

And the list goes on. Give any of the many forex trading systems you come across an initial read, and then pick one or two that make sense to you. And then study those two indicators until you “get them.”

Two of our favorite forex chart tools are the Candlesticks and the Bollinger Bands.

The Candlesticks, especially if you run the forex charts in your preferred trading time frame, give you a terrifically visual version of buying and selling interest in a particular currency pair. Candles truly are a case of a picture being worth a thousand words.

Bollinger Bands, meanwhile, enable you to see what would happen to a particular currency pair if nothing drastic happened. Because Bollinger Bands “follow” the price at standard deviations, Bollinger Bands can show you how volatile particular currency pairs are in terms of price.

Including Candles and Bollinger in your forex chart study, and consciously excluding every other indicator until you’re ready for more, can give you real insight into how you can profit from the patterns that emerge in the forex markets.

Slapping every indicator you can find on a forex chart or running indicator after indicator through your forex trading software only leads to confusion and the disobeying of Einstein’s rule about things should be as simple as they can be.

Don’t Ever Forget What Forex Charts Are Supposed to Show

People fall in love with forex charts. Just like with regular human love, this undying infatuation can result in a blinding effect: you don’t notice, even though all your friends do, that your significant other is helping you to empty out your bank account.

The remedy for this misdirected affection is to remember, regularly, what forex charts are supposed to show: price action on currency pairs. The price levels at which people want to rush in and buy a currency pair and the price levels at which people will rush out to sell a currency pair—those are the concepts your pretty charts want to show you.

And forex charts do, by and large, show you that info, provided that you don’t clutter up your charts with 75 other indicators that you at best halfway comprehend.

Matching Forex Chart Indicators to Particular Currency Pairs

You should also consider, when choosing which forex chart indicators to delve deepest into, matching up your indicators with your currency pair.

For example, if you’re trading the standard EUR/USD, a momentum indicator like Stochastics may not “show” much of anything because volume on the EUR/USD is everlastlingly huge.

If you’re trading AUD/USD, by contrast, a momentum indicator like Stochastics that shows a spike up in purchasing may be tremendously helpful. The more thinly a currency pair is traded, the more quickly increased momentum can move the price.

Matching your chosen forex chart indicators to your chosen currency pairs is always a smart idea. When you’re thinking like that, you’re thinking like a forex pro.



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