Forex Live Chart | How to Start Using a Chart

If you decide to do your own analysis you are going to need a service that provide forex live chart for you. A live chart means that the chart created instantly based on actual market data. Actually, even if you don’t perform the analysis yourself, it is still a good idea to have it.

First of all, you have to pick the currency pair that you want to analyze; it usually comes in the form of a drop down menu. After you find the one you want, select the chart type, it usually comes in 4 forms: Line, Bar, Candlestick, and Table. If you are a beginner, I suggest start with a Bar type. Once you select the type, choose a time frame such as one minute, five minutes, daily, weekly, etc.

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In a bar chart, each vertical bar that you see represents a time frame. The top of the bar is the highest price and the bottom of the bar is the lowest price during that particular time frame. For each vertical bar, there are two horizontal bars, one to the left and the other to the right. The left bar represent the opening price and the right bar represent the closing price for that time frame. Tips: Use the zoom function to see it clearly.

There are some things that you need to know when using forex live chart:

Understanding Support and Resistance
The market volatility can bring it anywhere and no one can predict it 100%. But based on historical data, there are some condition where the price doesn’t exceed or below a certain price for a period of time.
Example:
-From July to December, the EUR/USD prices never exceed 1.645, that means 1.645 is the resistance for EUR/USD during that period.
- From January to May, the USD/JPY prices never fall below 90.070, that mean 90.70 is the support for USD/JPY during that period.

These support and resistance data can be used to decide entry point. A conservative method is buying at support and sells at resistance. There is also more advanced strategy such as buying at resistance breakout and sell at higher price; it is all depend on the currency, circumstances, and your trading system.
Note: Breakout is when the price move through the support or resistance line.

Indicators
A good chart software also allows you to add various indicators. Indicator is a mathematical calculation based on prices that can be used to help you make decision. For example: MVA indicator can show you the average price for a certain period, EMA show you the weighted price calculation for a certain period, etc.

Back Testing
A lot of trader use forex live chart to do back testing for their system. They run their system based on data in the chart for previous one or two years to see if it is profitable system or not. The common problem with this is when they found that it doesn’t works, they tweaking the system so it can match the data and always create profitable transaction.

This is a huge mistake and usually the system will collapse immediately when applied to the current market. Back testing is good and you definitely can use the chart for that, but you also need to test the system in the current market for at least two or three months before decide that it is works or not. Using a dummy account is a good idea for this test.

Forex live chart can be used in various other ways to support a trader and understanding the basic function is a good start for your trader career.