How to Read a Chart
Forex traders have developed several methods for attempting to figure out the direction of a currency pair. Fundamental traders may read news sources to see how interest rates, economic growth, employment, inflation, and political risk affect the supply and demand for currencies. Technical traders use charting tools and indicators to identify trends and important price points of where to enter and exit the market.
But no matter what type of trader you are, you'll need to learn how to read forex charts...
The period is the time interval that the chart updates. For example, a period set to one day (d1) means that each point on the chart represents one trading day of data. A period set to five minutes (m5) means that each point on the chart represents five minutes of data. The data range is the amount of data you want the chart to populate. If you want to look at a full year of data, you’d set the data range to one year.
The default chart type is called a ‘candlestick’ chart. This chart type is used frequently in the forex market. A bar on a candlestick chart shows the open, close, high and low prices for the selected period. The body of the candle shows the open and close prices where the wicks show the high and low prices.
If the closing price is higher than the opening price of the previous candle, then the candlestick will be blue. If instead the closing price is lower than the opening price of the previous candle, then the candlestick will be red. Candlesticks simply make it easier to see if the trading period ended up or down.
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