This article is all about the basics of forex charts and using technical analysis to win. It's the simplest most time efficient way to achieve currency trading success and anyone can do it with the right forex education...
Forex charts allow you to see all the inputs that go to make up the price and while you get people who say you cant trade without taking into account the fundamentals, that to a degree is true - but forex technical analysis does take the fundamentals into account and the following equation will make this clearer:
Fundamentals (supply and demand) + Investor View Of = Price
The fundamentals are not important by themselves - it's how all the traders view them that makes the price. We all have the same facts to look at but we all draw different conclusions from what we see and this vast mass of opinion makes the market price.
Technical analysis simply assumes that all fundamentals will quickly show up in price action and it also does something more - it tells you how the investors perceive them.
Markets move on investor sentiment and that's why studying charts is so effective.
Human nature is constant and this is reflected in the charts.
The same formations reflect human psychology, again and again and if you can spot these high odds formations or patterns, you can execute you're trading signals, with the odds on your side and enjoy currency trading success.
A big myth about forex charting is you need to predict what happens next.
You don't.
If you do you are simply hoping or guessing and that won't get you far in life, let alone forex trading. You should simply trade the truth, as you see it, on the chart and by doing so, you will have the odds on your side.
When trading with charts you only need a simple system, as it's proven that simple systems work best, as they are more robust in the face of brutal ever changing market conditions.
You also need to trade valid data.
This is data where you can get the odds on your side and this means no day trading and no forex scalping!
The data is not reliable and prices can and do go anywhere in a day. In the longer term you can measure investor sentiment but not in the short term.
If you have a simple trading system, trade the reality of price and show discipline you can win.
Forex charts allow you to step back from the crowd and see value and sentiment, right there on the chart which you can trade for profit.
Charting is an art not a science but if you practice your art, you will soon have a powerful way of trading which will allow you to seek big forex profits in just 30 minutes a day.
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