Learn to read and interpret Forex Charts step by step

Trading can seem daunting, at least at first, for beginning traders, however, with the help of certain tools, decisions about what to trade and when start to become much simpler. 

Among all these tools, one surpasses the rest: knowing how to read and interpret trading charts. Real-time trading charts help traders analyze what is currently happening in the market. They also provide special hints and ideas about what might happen next, but only for those well-versed in interpreting Forex charts and other instruments. 

What is a Trading Chart 

Trading charts show the evolution over time of the price of financial assets. They represent the price and allow analysis on them to try to predict the future movement of the price of said assets. We distinguish three types of charts: linear, bars, and candles.

How to access Trading Charts in real-time

Before you can learn to read trading charts, you must first be able to access them.

Viewing trading charts in real-time on every broker site is essential for making trading decisions, as they show all the buying and selling activity currently taking place in a market.

The MetaTrader platform is one of the best trading platforms used in financial markets. Admirals offer the following trading platforms for you to access free real-time trading charts:

• MetaTrader 4
• MetaTrader 5
• MetaTrader WebTrader
• MetaTrader Supreme Edition

Most Forex traders start with MetaTrader 4:

One of the main benefits of these platforms is that you can trade directly from the chart you are viewing.

Therefore, once you are clear about how to interpret trading charts and identify possible signals to operate, you will easily access the option to open operations, buy or sell.

MetaTrader will show you the prices of the assets in real-time. Typically, the broker receives prices from the interbank market and top-tier liquidity providers, ensuring that you are truly connected to the global market.

So what do these free trading charts tell us, and how do we read them? Let's find out!

How to read Trading Charts

This section will cover the basics of chart reading before moving on to a more advanced interpretation of Forex and other markets charts in the next section.

1. How to read the price and time axis
2. How to interpret the movement of the asset in pips
3. Interpretation of the graphs depending on the type
4. Read charts depending on the time frame 

The price and time axis on the trading chart

The first step to correctly reading a chart in MetaTrader is knowing how to interpret the price and time axes.

➤ The horizontal axis of the graph shows us the time. This means that we can see historical prices as we move to the left of the chart. The dates and times displayed will vary depending on how the graph is zoomed in or out. The further away it is, the more historical price action you can see. 

➤ On the other hand, the vertical axis shows the price at which a certain asset is trading at that moment.

How do you read this trading chart? Based on this simple understanding of price and time, we can deduce some scenarios that help traders make decisions about what to trade and when: 

➤ If the price has fallen from the left side to the right side of the trading chart, we can deduce that during that period of time, the market is in a downtrend or that the sellers are in control.

➤ If the price of the asset has increased from the left side to the right side of the chart, we can deduce that during that period of time, the market is in an uptrend or that the buyers are in control.

This may sound simple to some, but it is actually quite important. Why? Because once a market trend kicks in, it could stay that way for an extended period of time.

Another way to interpret Forex charts is by calculating how much a market is moving up or down. For this, we must analyze the asset prices and be clear about what the "pips" are.

Read the full post on the DotBig broker website.