Forex charts are a tool that you are going to have to use when you trade on the forex market. Technical analysis is the most common form of market analysis and this uses the forex charts. However, there are a number of mistakes that you can make when you use forex charts. It is important that you know what these mistakes are so that you can avoid them when you trade.
Mistakes with Analysis
Thorough analysis of charts is important as you need to be quick in your reactions to the market. This is an extremely fast-paced environment that needs you to think and act fast. A slow reaction could cost you and you may even lose the trade completely. You need to move one step at a time. Commence with a single chart type and learn the correct methods of analysis of the chart. Once you feel confident in your knowledge of using that particular chart, you can move on to another type of chart.
When you are aware of correct analysis of a chart, you can use it as an indicator of the current situation, but you can also use it to predict a future trend. This knowledge and method can give you the edge and help you make suitable profits.
The Forex Charts Tools
Many new traders tend to use forex charts with a range of other analysis tools. Making use of too many trading tools could cause confusion and you will not be able to absorb all the information. You need to find the best combination of tools with charts to suit your personal method and style of trading. Eliminate the unnecessary tools and ensure that the charts you are using are current charts. There is no point in using historical charts if you need current events. Historical charts are suitable if you want to predict a trend.
The Time Zones You Use
Some of the forex charts that are available may be in a time zone that differs to the one you are in. You must ensure that you are viewing the correct time zone whether it is current or historical. This is particularly important if you are trying to capture trends in the market by making use of the charts.
Real-time charts do not present you with this problem as they are being recorded right now. This real-time information is relevant irrespective of the chart’s time zone.
The Time Frames You Use
Most charts offer you the facility to view various time periods. You should view a large enough time frame to obtain the most appropriate information. Many traders only look at the current time frame which often does not provide them with sufficient information for them to make an effective decision. The time frame you check on should cover minutes, hours or, at times, days. The time period will be dependent on the type of trading you are carrying out. If you are looking at short-term trades, then you should view relevant short-term time frames, and the same applies to long-term trades.
Forex charts are an extremely important feature of your trading. You should spend sufficient time on them to make sure that you understand what you are viewing and what you would like to view.