Learning the basic skills in forex, such as how to read forex charts, is really vital.

This is because once you have this vital skill under your belt, it will be a lot simpler and quicker when the time comes for you to learn and practice an actual forex trading system.

By the time you end this article, you’ll learn how to read forex charts, as well as know the pitfalls that can occur when reading them, mainly if you haven’t traded forex before.

Firstly, let’s revise the basics of a forex trading as this relates directly to how to reade forex charts.

Each currency pair is always quoted in the same way. For example, the EURUSD currency pair is always as EURUSD, with the EUR being the base currency, and the USD being the stipulations currency, not the other way round with the USD initially. Therefore if the chart of the EURUSD shows that the current price is fluctuating around 1.2155, this means that 1 EURO will buy around 1.2155 US dollars.

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During the last decade, Forex trading has become one of the most attractive business opportunities to ever hit people’s interest around the world. Every day people from many walks in life is actively considering inflowing the profitable world of the currency markets due to its accessibility and trading characteristics.

One of the initially things you will do once you choose you want to enter and learn about the forex markets will be to choose your forex broker and then download the free trading platform software from your broker website.

When you initially open your trading station software, you will find that there are a number of ways to enter the market or, said in another way, there are a number of ways to place an initial order to buy or sell any currency pair.

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Currencies are traded on a price/ point (pip) system. Each currency pair has its own pip regard.

When you see a FOREX price quote, you’ll see something listed like this:

EUR/USD 1.2210/13

Explanation:

a) If you want to BUY the EUR/USD ( meaning you BUY EUROS and SELL US$ ) you buy 100,000 EUROS and you SELL 122,130 US$, or in other words you hear
122,130 US$ for 100,000 EUROS.

B) If you want to SELL the EUR/USD ( meaning you SELL EUROS and BUY US$ ) you buy 122,100 US$ and sell 100,000 EUROS, or in other words you hear 100,000 EUROS for 122,100 US$.

The difference between the bid and the ask price is referred to as the apply. In the example above, the apply is 3 or 3 pips.

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