Trading lower leverage ensures that you have enough capital to become experienced in the market. There’s plenty of time to implement higher degrees of leverage once you gain competency and security in the marketplace. However, in FX trading, leverage is the quintessential double-edged sword; it simultaneously boosts profit potential and assumed liability. During volatile periods, an unfortunate turn in price can generate losses in excess of deposited funds. The result can be a premature position liquidation, margin call or account closure.

When investors increase their demand for a certain currency, that currency’s exchange rate will rise. Demand can rise or fall for any number of reasons, including the strength of a nation’s economy and central bank monetary policy. You can find exchange rates in a number of different places, ranging from banks to websites like XE.com. If you’re traveling, you can often find rates posted at airports or local banks. If you’re trading in the foreign exchange (“forex”) market, look at your trading platform for real-time information. The candlestick chart’s origin lies in a Japanese method of technical analysis to read the price of rice contracts.

Simple Moving Average Line

Once the Engulfing Bullish Candlestick formed around this crucial support level, it prompted a significant number of pending buy orders just above the high of this Engulfing Bullish Candlestick. When the price penetrated above the high, it triggered those orders, adding the additional bullish momentum in the market. To the left you’ll see some various Japanese candle formations used to determine price direction and momentum, including the Doji, Hammer, Spinning Top, and Marubozu. In this context, don’t forget that the consolidation is within the context of a down-cycle not only in the higher time frames but also on the hourly. Until buyers manage to break and hold above the latest valid swing high, which doesn’t occur, the risk remains to the downside. This is a key point that often gets overlooked by market participants by letting too much guessing play a role.

This relatively simplistic view of overall rate movement can supplement your analysis on other charts. For example, if you’ve noted a down-trend in the last 24 hours, you could check on the line chart to determine whether the lowest point is down overall, or coming down from a spike. Since you’re typically looking at a bigger https://www.bigshotrading.info/ picture with line charts, you may want to set a longer time period for your line chart. The maximum length of time you can set depends on the service you’re using to generate your chart. When you choose a currency pair, for example, EUR/USD, the chart you generate will show you how many US dollars you can buy for one Euro.

How to read forex charts

The key to successful trading is accurate information and accurate forex trading chart patterns. The analysis of a candlestick chart can be fine-tuned based on your how to read currency charts preferred trading strategy and time-frame. Some forex traders might focus on taking advantage of candle formations, while others attempt to spot price patterns.