Using Charts To Trade Forex

An Introduction to using charts to trade Forex. Showing the basic principals of chart analysis.

Usd v Swiss Franc - Time Frame Daily (D1)

Usd v Swiss Franc - Time Frame Hourly (H1)

There are three lines on the above chart called moving averages (Ma). One is purple , that is a 20 day Ma. Another is red, that is a 60 day Ma. The last one is black, that is a 180 day Ma. There are many different Moving Averages you could use and its only a matter of personal choice which ones you would use, however the important thing is how clearly you can see the change in direction of the market as the short average crosses the longer averages.  As long as the two shorter averages are below the long average I would use SHORT POSITIONS. ( Short positions make money as the market falls). As long as the two short averages are above the long average I would use LONG POSITIONS.( Long positions make money as the market rises).  It can be a good idea to take profit at any time the two shorter averages cross over.

Meta Trader Charts have many time frames from 1 min. to 1 month you can set them as you like and change them at the click of a mouse. I have shown you how to view a daily chart because this has more information and you can clearly see how the market has behaved over the last 18 months or so.

It is much clearer to view the last month on a chart time frame such as an Hourly chart as above. For this example I have set 5 different Ma's. I have as with the daily chart set 20, 60 and 180 point moving averages (this is now in hours not days) purple, black and blue respectively, however I have also set two more averages to represent the 20day (the gray line) and the 60day (the red line) moving averages.

This shows very clearly a rally up to the 60day Ma  and the obvious take profit point as the 20Hour Ma (the purple line) crosses the 60 Hour Ma (the black line).

Once you have taken some profit the big question is what do we  do now and when do we re enter this trade. I would say BUY above the 60day  and SELL below the 20day and stay off this trade until one or the other looks more certain.

That as they say is that, It really is that straight forward, You make money as the market rises and You make money as the market falls, All you need to do is Buy the ups and Sell the downs.

I would just like say at this point, Nobody knows for sure which way the market will go in the next five minuets or five hours or five days and no indicators will tell you that. The skill in this business is using your judgment to buy or sell at the right time. If you would like a chance to test your skills why not download your Free Meta Trader Demo Platform Now !!!

There are many ways to analyze the data on these charts so before you start  you'll need to choose how you want data to be displayed on your personal terminal by setting up the properties on your charts (its quite easy but I will give you more about this later). Then you need to set up any indicators you want to use to analyze your market, The Meta Trader Platform has a long list of indicators to help you analyze your chosen market. In my opinion the simplest and most useful of all indicators are the Moving Averages, Used by almost all traders to outline the current market trends over a period of time. Below is a brief explanation of how you can use averages over different time scales to help you recognize clearly how a market has been behaving over a given time.