Forex Charts

Forex charts look similar to stock and futures charts. If an investor wants to see the historical chart of a stock, all he has to do is specify the stock's ticker symbol and the period of the chart (10 minutes, 1 hour, 1 day, etc.) that he wants. Pulling up a chart of a currency is the same thing, but instead of the stock symbol, the trader enters the desired currency pair he wants to graph (EUR/USD, USD/JPY, GBP/USD, etc.). Look at the real time FX chart example below. It was obtained from our live trading platform and it shows the price of the euro versus the US dollar on a 15-minute time frame (each green and red candle represents 15 minute's worth of prices). Interpreting charts is part of the free forex training that we provide customers who open a trading account with US$50,000 or more (click here to register for a free live demo of our forex software that includes live charts).

Example Provided Only for Numerical Purposes (this was not an actual trade): The forex chart above shows the price of the EUR/USD during December 27, 2004. It shows a strong move in the euro from a low of 1.3523 to 1.3639; a difference of 0.0116 or 116 pips (read about currency pip values and calculating profit in forex here). One hundred and sixteen (116) pips is equivalent to $1,160 dollars, since each pip is equal to US$10 for the euro us dollar pair. Since the margin requirement for standard lot is $1,000 euros (1% of the lot value = 1000 euros = US$1,352.3), a gain of US$1,160 represents a return of approximately 86% on a margin requirement of $1000 account. Even though the move in the foreign exchange rate from 1.3523 to 1.3639 was only about 0.86%, with a 100 to 1 margin requirement, it becomes a return of 86%; that is, it gets multiplied one hundred times (increasing leverage increases risk. If the price would have moved by the same amount in the opposite direction, a loss of 86% would have ensued). If you do not completely understand this example, please read the sections on forex quotes and calculating profit and loss in forex trading.

More FX Charts

Assuming you are not familiar with forex, if you traded stocks before and take a quick look at the chart below, you might mistake it for a stock chart. You might say that it is a daily chart of a stock whose price is currently 109.53 per share (price in red on the right axis of the graph). In reality, the graph below is a forex real time chart of the US dollar versus the Japanese yen (USD/JPY) during a period of about two months. A current quote of 109.53 means that 1 US dollar is worth 109.50 Japanese yen.

Since forex charts are and stock charts are very similar, a stock investor that wants to trade FX can easily get used to foreign exchange charts. Let's say that a trader that feels like the dollar will strengthen against the yen (for whatever reason), buys USD/JPY. After his purchase, let's say that the chart moves up (109.95, 110.23, 111.22, etc.). His P/L (profit and loss balance) will also move up (positive).

The three colored lines (green, dark blue, and light blue) shown on the chart above are technical indicators. This particular indicator is called the "simple moving average (SMA)." A simple moving average is an arithmetic average of the price over a certain number of time periods. The moving averages shown above are the 10-period, 20-period, and 50-period moving averages; i.e., the average price of the currency pair over the last 10, 20, and 50 days respectively. The use of moving averages and other technical indicators is part of "technical analysis:" the study of historical prices to get an idea of what the price might do next. The use of technical analysis is the core of trading currencies and is included in the forex training we provide our customers. Our exclusive forex mini trading e-book also includes technical analysis techniques.

Free Forex Charts

If you understand how to read forex quotes, you can begin to trade currencies using our real-time free forex charting package. Forex trading is much better than trading stocks in many ways (click here for the advantages of forex over stocks). If you read the charting examples on this page, you will realize that a lot more money can be made (or lost) trading forex because of the superior leverage involved (100 to 1).

To get access to free forex charts, register for a free 30-day demo of our trading software. This demo will not only let you look at different fx charts in real time, but it will also allow you to place mock trades at actual market prices. This is a great way for you to become familiar with our platform and is the first step required to learn how to trade currencies effectively.

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