How to read a forex chart
How to read graphics? This question worries many novice Forex traders, who realized that many
of the indicators of technical analysis are late or simply do not work.
But first you need to learn two basic principles that shed light on the ability to read a graph.
Reading of the graphs must be done from left to right. This is the first principle to be learned in
order to learn how to learn to understand and read the graphics of exchanges - to study bar charts
and candles as a story that develops in time from left to right and analyze the current situation in
the context of the past.
Read the graphs, analyzing the interaction of three independent parameters: volume, time and
price. Because the analysis of trader charts is reduced to the calculation of the balance of supply
and demand. And the forces of supply and demand, according to the law of the same name, are
expressed through the price (the vertical axis in the figure above) and the volume (the number of
transactions, the horizontal). Being able to read volume and price charts in time, a trader can see
the change in the balance of buyers and sellers (reason), and take a favorable position
beforehand, before the price starts to change (effect). Currency traders ask how to read forex
charts, if the broker does not provide data on the actual volumes? There are two answers:
- Replace the data of real volumes with tick volumes. Gavin Holmes, like other VSA experts,
argues that the tick volume lawfully shows activity. Namely, the activity of players - and there is
a meaning, displayed in the amount of volume, tick or real.
- Take the volume values from derivatives. For example, from the futures market.