How A FOREX Chart Can Help You?
Whether you are trading in stocks, commodities or foreign exchange, you will
likely need to make the most of the tools available to you if you wish to have any
chance of making a profit. In the case of FOREX trading, the ability to
understand how to use a FOREX chart is likely going to be of paramount
importance to your investment strategy.
Basically, a foreign exchange chart will help you to analysis technical information
about the movements of foreign currencies over the coming hours, days, weeks
and months – depending on how long-term you are looking to invest. Here, the
chart will be able to assist you to determine the ups and downs that the currency
will take – and also whether or not the currency needs to correct itself. The
fundamentals of this type of investment strategy are anchored in what is known
as the Elliot Wave Theory, which predicts that a currency movement is completed
on its fifth wave cycle. Reading the chart allows you to pre-determine when this
fifth wave is like to occur and so know when to buy/sell your currency.
That said, in order for a chart to be of any use to you, you not only have to keep
a track of where the currency has moved, but you also need to log the reason
why it moved. For example, if the FED put up interest rates, there’s a chance the
Dollar would appreciate in value against other currencies (depending in part on
other variables). However, to log an appreciation in the Dollar without a
corresponding entry that there was a rise in interest rates may not mean an awful
lot to you later when it comes time to read the movements of the Dollar.
Consequently, foreign exchange charts need to contain highly technical
information that is made available in an easy to read format. Moreover, all of this
information need to be available to you immediately – on your desktop.
There is absolutely no doubt that FOREX charts can play a pivotal role in your
FOREX trading activities, but to be of real use to you they must convey why,
when and where things changed. To understand this, you will need to spend
some time getting used to how charts are compiled. Once you have mastered
this, you will find them a reoccurring useful source of information in your daily
battle to make a successful career as a foreign exchange trader.
