The Forex Market Chart

There are different chart formats and these can be available, provided by your brokers. These are

• Line chart,
• Bar chart, and 
• Candlestick chart. 

Out of the 3 charts, Candlestick chart is widely used throughout the world. 

Normally these charts would at least (or only, for line chart) show the closing price of the currency pair you are trading. However your broker's platform might enable you to view the chart based on other factors, such as the opening price, average price, and etc.

Monday, The Day With Questions

Why do I describe Monday as the day with questions? Because we are unable to determine whether the market will be going uptrend or downtrend with technical analysis. The chart we will be looking at for this day is broken, as the door to the forex market has only just been re-opened. 

From the Euro 1H chart on the left, look at the 2 areas on the chart circled in red, we can see a 'gap' formed. This gap was formed when the market re-opened on Sunday evening (EST). Most probably the cause of the gap is due to news reported on the weekends, and having an effect on the currency rate when the market was closed. 

We will be able to have a better look on the gap with the 15M chart. The news that were reported while the market was closed led to an uncertainty on the trend that would be formed when the market re-opens. Therefore, traders would usually avoid keeping their trades open over the weekend, knowing the risk and uncertainty they will be facing. 

*Look at the red trendline on Friday's market. 

If anyone has entered short he would have earned a neat 200 pips or even more. But this sudden great fall was not supported by any news given in ForexFactory.

Friday, The Untouchable Day

Do a search on any forex forum regarding Friday, you could easily find comments on not to trade on this day by many traders, and claims from some veteran traders that they either make less trade or none at all. 

I myself, have had suffered on Friday due to many trades lost. Even through constant reminder to myself not to trade on this day, it is uncontrollable when you are looking at the candle stick chart and see a potential setup for entry. 

The market on Friday tends to be unstable and unpredictable. As the day is the last opening day for the week before the market closes, access and control to traders' open trades would be denied on the weekends. 

Also, there are news events that will cause volatile movements on this day. An example would be the Non-Fall Payroll news event occurs on every first friday of the month. 

If you have the intention to trade on this day, do approach and monitor the market closely. 

*Refer to next post for an example of a market chart on Friday. 

Before Live: Step 4

Step 4: before you enter live in forex trading, determine and only......

After completing all the 3 steps listed, you are now ready to open a live account. But before you decide to open a live account, do a check on your broker reputation by reading reviews posted by the other traders. You may uncover stuff and information which you have never been aware of. There can be surprises happening in live trading, but not during trading on demo platform. 

It is also important to understand how your broker works regarding funding/withdrawing capital to/from your account. The method of funding is essentially through bank wire transfer. However some brokers may accept other methods of funding, such as through the use of Paypal services. Thus, make a wise choice by determining which method of funding is the most beneficial to choose to. A hint here would be to look at the transfer fees that is going to be incurred. Likewise, take note on how you can withdraw your earnings too. 

One last important note you should look out for is whether your broker charges any fee on triggering a trade. The fee has a direct impact on whether you are in a winning or losing postion, when your trade closes. If you think that the fee imposed might lead to a high chance of being at a disadvantage position for every trade you trigger, you may wish to consider using another online broker, that doesn't impose a fee on triggering of trades. 

Last but not least, do not invest all your savings in forex, or large amount for the first time! Remember, this is an investment, and risks of losing all your invested capital can happen. Also you will be experiencing feelings which are totally different when trading live, compared to previous few months when you are trading on demo.

Before Live: Step 3

Step 3: hit on the forex forums. There are experienced traders who are......

Forex forums are great places to search for both answers and questions. Discussions and analysis on the market and news for various pairs can be found easily. There are also traders who are willing to share their own trading systems, or their custom made indicators. Not only that, forums also provide news information and real-time statistics that may cause major movement to the market. 

The forum I am using currently is ForexFactory, and there are definitely other forums available to the public and which you prefer to stick around with. I would recommend the beginners to pick a trading system from these forums which you like, adapt to the system after testing, and determine if you would like to make any changes to suit your trading style. This way, you save the trouble and time from thinking hard on how to build a trading system from scratch. There are just too many indicators available, and different combinations can be formed when these indicators are put together. 

Before Live: Step 2

Step 2: try out demo trading. Almost every good broker provides a demo trade platform......

It is important to try out the demo trade platform provided by the broker you are interested in. Through demo trading, not only will you have a taste of how forex trading is like, but you also get to accustom yourselve to the platform system your broker is using. It helps to prevent or minimize silly mistakes that you will make if you have jumped into live trading right from the start. 

An example of silly mistake would be entering into the wrong trade position that you had intended to enter. Such mistakes could have caused you to suffer monetary loss in live trading, but not in demo trading when virtual money is used. 

Different brokers uses different platforms, and some brokers have their own customized platforms, whereas others might be implementing MT4 charting with their own system. 

The functions that are provided by each broker's platform can varies too. 

Therefore do try out the broker's demo trading platform to check your comfortability and whether the functions of their platform fulfill your needs, before you make a decision of entering live trading with the broker.

Before Live: Step 1

Step 1, know what exactly is forex. The information can be found......

I had done searches via the internet, and I came upon this website which provides tutorials and knowledge regarding forex, BabyPips School. It is referred by many other websites and forums, and I personally find the tutorials extremely helpful in understanding forex trading.

You may locate BabyPips School link in the sidebar, for tutorials and guide. (scroll the pages if you don't see it)

Almost everything covered in BabyPips is important for one's knowledge before starting trading in forex. Therefore be sure to complete the tutorials when you have the time.

Here are highlights which I find them most crucial to a beginner in forex trading:

1) Learn to read the Quotes, understand Long and Short,

2) How to choose your Forex Broker,

3) Know how to read Candlestick charts, identify Candlesticks Patterns, and Chart Patterns,

4) Understand Support & Resistance, and Elliott Wave Theory,

5) Keep in mind of Market Trading Hours and Money Management,

6) Difference of Fundamental and Technical Trading.

Once again, I would like to point out that these are just highlights I had suggested, it is important to go through every tutorial found on BabyPips.

Before I Started Forex Trading

I entered live in forex trading on 18 December 2008. Before I decided to enter live, there are a number of things which I had done.

Entered Live: Trading with Capital Invested (real money)

Step 1: know what exactly is forex. The information can be found through searches on the internet. There are even free online tutorials to guide the greenhorns.

Step 2: try out demo trading. Almost every good broker provides a demo trade, whereby you can have a taste of trading using virtual money. Also all the quotes in demo trading are given per real-time quotes by the broker.

Step 3: hit on the forex forums. There are experienced traders who are sharing their trading system on the forums, search these systems, find the one which suits your style and able to help you gain from the demo trades.

Step 4: before you enter live in forex trading, determine and only invest the amount of money that you are willing to lose. Understand how your broker works, from demo trading in step 2 and read every info that may concern you as an account holder on the broker's website.

For the next few posts, I will be focusing on details for each step, and how I had completed them.