Forex Charting - Getting Started in Forex Charting the Basics

Forex Charting - Getting Started in Forex Charting the Basics

by Monica Hendrix

Forex Charting is something anyone can learn and anyone can make profits with here we are going to go through the basics of what you need to get started.
Were going to assume you already know the logic of forex charts and why they work if you don't look at our other articles. Right lets get started on the basics of forex charting.

Time Period

Forex markets trend and you can see these trends on a chart and you are going to have to decide, what time period you want to trade.

You can day trade ( moves within the day), swing trade within the major trend (moves that last around a couple of days to week), or long term trend follow (moves that last weeks or months)

Don't try forex day trading or scalping.

The time period is to short and volatility is random and this means you will lose. This leaves you with a choice between swing trading and long term forex trend following.

Swing trading, suits the trader who likes lots of action and lacks patience and it also requires less discipline than trend following, as profits and losses come quickly.

Forex trend following requires patience and discipline - but can be very lucrative, if you lock into the big trends.

Keep It Simple

Forex charting is essentially about keeping it simple and our view is all you need is to use chart formations, support and resistance and a few confirming momentum indicators, to make sure when you execute a trading signal, you have momentum on your side.

The reason simple systems work best is - they are robust and have fewer elements to break than complicated ones.

Now let's look at the basics of technical analysis applied to swing trading and trend following.

Basics of Swing Trading

You are simply looking for support and resistance levels to hold and trading into them. When you do this always do the following:

- Wait for momentum to turn down from support or resistance and execute your trading signal. No predicting wait for confirmation from momentum to get the odds on your side.

- Place your stop immediately and look to take your profit early you are not interested in trailing stops - take the trade in just before the resistance or support is tested.

Long Term Trend Following.

Here you can buy into levels of support or resistance - but the bulk of your trades should be to buy or sell breakouts to new chart highs or lows.

It's proven that most big moves start form these breaks and you can see this on any forex chart.

The way to execute forex trend following trades is different to swing trading:

- Again execute your trade in line with momentum.

- Next place your stop

- Now here comes the part that will determine how much money you make - trailing your stop.

Most traders are so keen to lock in profits they trail stops too quickly and get bumped out the move early. You're after the big trends and you need to stay with them and that means trailing your stop behind random volatility.

We like to trail the stop behind the 40 day MA and while this may sound wide ( it is ) it will keep you in the big trends for longer and remember, if you caught just 50% of every major trend you would be very rich!

A Simple Route to FX Profits any Trader Can Learn

To get started with forex charts and get a simple system together should only take about a week and then your all set to get down to making some serious forex profits.

We keep it simple in our forex trading strategy, just basic bar charts a few momentum indicators and that's it and you should to.

A simple forex trading system will make money, if you apply it with discipline and lead you to currency trading success.