Forex Live Chart – What You Need to Know About Charts

Forex live chart is a necessity if you are planning to do your own market analysis. ‘Live’ here means the service that provide it will use current actual market data to create the chart. Actually, it is a very handy tool to have even if you don’t do your own market analysis.

The first step is to choose the currency pair to analyze from the drop down menu or other interface. After you find the one you want, select the chart type, it usually comes in 4 forms: Line, Bar, Candlestick, and Table. If you are a beginner, I suggest start with a Bar type. Once you select the type, choose a time frame such as one minute, five minutes, daily, weekly, etc.

In a bar chart, each vertical bar that you see represents a time frame. The bar at the top is the top price and the bar at the bottom is the bottom price for that specific time frame. There are two horizontal bars for each vertical one; one on the left side and one on the right side. The bar at the left is the opening price while the bar at the right is the closing price for that specific period of time. Note: Utilize the zoom feature to see it in detail. Usually, charting is a standard feature in a trading platform, read more about it at forex trading platforms.

If you are going to use forex live chart, you should at least know these things:

About Support and Resistance
The market volatility can bring it anywhere and no one can predict it 100%. But we can get the information from historical data that there are a period of time where the price doesn’t goes higher or lower from a specific price.
Example:

-From July to December, the EUR/USD prices never exceed 1.645, that means 1.645 is the resistance for EUR/USD during that period.

- From January to May, the USD/JPY prices never fall below 90.070, that mean 90.70 is the support for USD/JPY during that period.

Entry and exit point can be decided based on these support and resistance data. A conservative method is buying at support and sells at resistance. More advanced strategies like sell at higher price or buying at resistance breakout are also applicable; you just need the right time, currency pair, and trading system.
Note: A time when the price has moved passed support or resistance line is called breakout.
Today, there are various easier ways to decide entry point, read about it at forex trading signals.

Indicators
A good charting tool will at least have the feature to add various indicators. Indicator is a mathematical calculation based on prices that can be used to help you make decision. For example: MVA indicator can show you the average price for a certain period, EMA show you the weighted price calculation for a certain period, etc.

Back Testing
A lot of trader use forex live chart to do back testing for their system. They test their systems against the chart data on a specific period of time and see if the system is profitable or not. The common problem with this is when they found that it doesn’t works, they tweaking the system so it can match the data and always create profitable transaction.

This is a huge mistake and usually the system will collapse immediately when applied to the current market. Back testing is good and you definitely can use the chart for that, but you also need to test the system in the current market for at least two or three months before decide that it is works or not. Utilizing a practice account for this test is recommended.

There are various ways to use a forex live chart in order to boost your trading and learning the basic of using it is a great beginning for your career as a trader. If you interesting to know more about forex trading, visit learn currency trading.