Forex Online Trading – How to read and analyze charts

Forex Online Trading Forex online trading brokers make money on incremental differences in exchange rates, and to monitor these changes, they analyze charts that show trading patterns over time. While a number of different types of charts exist, forex has its own chart system which is the most common way to evaluate these fluctuations and hopefully translate them into profit.
In this sense, once you have learned to analyze charts as well as the pitfalls that can occur in forex online trading when reading them, it will be a lot easier to work towards the best results for you in forex.
Firstly, is important to go through some basics that relate to reading charts in forex online trading.
Each currency pair is always quoted in the same way. For example, the EUR/USD currency pair is always as EUR/USD, with the EUR being the base currency and the USD being the terms currency. Therefore, if the chart of the EUR/USD shows that the current price is fluctuating around 1.2322, this means that 1 EURO will buy around 1.2322 US Dollars.
Your trade size is the amount of base currency that you are trading. In this example, if you want to buy 10.000 EUR/USD, you are buying 10.000 EUROs.
Forex is about making profit with currency fluctuations, so in this regard, if you buy the EUR/USD currency pair, realize that you are looking for the chart of that currency pair to go up. In other words, you want to base currency to strengthen against the terms currency.
On the other hand, if you are selling the currency pair to short the position, then you are looking for the chart of that currency pair to go down, or you want the base currency to weaken against the terms currency.
Keep in mind that a price is always quoted with a bid and an offer. For example, the current price of EUR/USD may be 1.2322 bid and 1.2325 offer. When you buy, you buy at the ask, which is the higher of the 2 prices in the spread, and when you sell, you sell at the bid, which is the lower of the two prices. On most forex online trading charts, it is the bid price that appears on the chart rather than the ask price.
Remember to check the time frame displayed on your chart. Most trading platforms will use multiple time frames to determine the entry of a trade. For example, a system may use a 4 hour and 30 minute chart to determine the overall trend of the currency pair and then a 5 minute chart to look for a rise from a temporary dip to determine the actual entry.
Always ensure that the chart you are looking at has the right time frame for your analysis. The best way to do this is to set up your charts with the correct time frames and indicators on them for the system you are trading, and to save and reuse this layout.
Take into account that the times shown on the bottom of forex charts are set to a particular time zone that the forex provider´s charts are set to. It´s always handy to have a world time clock on your computer desktop to convert different time zones. Also, check whether the times on your forex online trading charts correspond to when the candle opens or when the candle closes.
Finally, practice reading other types of charts related to forex such as currency charts, as this will help you grasp the dynamics of the market while speeding up your progress forex online trading.