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Making Profitable Predictions with Forex Chart Techniques

Aug 17, 2007
Being able to read trends and forecast fluctuations using Forex chart techniques in the foreign currency exchange is a skill that will take you from a beginner to someone who is much more successful in Forex trading. By being able to take advantage of upcoming rate changes, you will be able to make more trades that lead to a profit. There are two primary methods that are used to understand market fluctuations, technical analysis and fundamental analysis. Being able to read and understand Forex chart techniques is particularly essential to technical analysis. Most experienced brokers and traders will often use a mixture of both.

Technical analysis relies on basing predictions using charts and graphs based on prior Forex market movements. This is a popular system because it looks at real historical data and is often very reliable. The two main components that are charted in relationship to the Forex market are trends in price movements, and the past history of Forex. All of these factors effect rate changes, because the Forex is so sensitive to all of these influences.

Price changes refer to trends in pricing that usually repeat over time, and when graphed on a chart, can easily reveal reappearing patterns that can help you make decisions. Another popular area for creating chart techniques are historical trends, which is usually charting the relationship between time and prices. This can be charted in a number of different ways, and are usually labeled in five major categories: waves, number theory, indicators, gaps, and trends.

As you may imagine, this can get confusing for a inexperienced trader. Most charts are now available online, as part of a subscription service, and include frequent updates. Because technical analysis is a popular method, there are many services available. If you would like to become more proficient in Forex chart techniques, joining a service that provides charts via the Internet, and assistance in reading and analyzing the chart information, can be very helpful.

Fundamental analysis is often used in conjunction with chart techniques, but relies primarily on current events and politics, such as seasonal changes, supply and demand, and governmental actions. while not necessarily historical data, it can be invaluable for understanding Forex pricing and rate change. Because you are trading in the currency of different countries, political and economic factors that affect those countries will often be reflected in the Forex.

If you are planning to be successful with Forex trading, it is important to familiarize yourself with forecasting techniques such as technical and fundamental analysis. Because these techniques can be complicated, being able to access this information online and to practice chart reading and forecasting will go a long way to increasing your success with Forex. While it may be a little daunting at first, you will be joining the ranks of those successful in Forex trading.
About the Author
Amy Wells is an enthusiast of Forex trading and writes and reports on consumer finance issues. You can get
more information on forextrading at: http://www.forex.yourtechtool.com/Foreign-Exchange-Forex/Forex-Software-1.php
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