Using the Right Forex Charts

Forex Charts Guide

A lot of traders will look at forex charts for a number of different reasons.  There are some traders who use forex charts are their primary analysis of the market.  There are other traders who use forex charts as their means of finding an entry into the market.  Regardless of the reason why you use the charts you need to consider whether or not you are using the right ones.  The right charts will be the forex charts that are using the correct timeframe for what you are looking at.  The timeframe of the charts can affect a number of things and you need to consider this.

The Forex Charts Timeframes

There are a number of different timeframes that you can use when you look at fore charts.  The first is the yearly charts which is the longest chart timeframe and one that many retail traders will not be using.  The next is the monthly charts which is a chart type that certain traders are going to use.  After the monthly charts you will get the weekly, daily and hourly charts.  Once you have passed the hourly charts you are going to be looking at the 15 minute, 5 minute and 1 minute charts.  The 1 minute chart is the smallest chart that you can get.

Using the Right Timeframe

The timeframe that you are going to use for the charts will vary depending on the type of trading that you are going to do.  The timeframe will also vary depending on what you are looking for.  If you are looking for the overall movement of the market then you should consider the long-term charts.  However, if you are looking for an entry point then you should be using the smaller timeframe charts.

Using Multiple Timeframes

There are some traders who should be looking at the use of multiple timeframes for their trading.  If you are a long-term trader then you are going to need to consider this.  Long-term traders will use fundamentals or long timeframe charts to determine what the market is going to do.  These traders should then look at the 15 minute charts to find the best entry point for their trades.  It is not necessary that they look at the shorter term charts because they will be able to get what they need from the 15 minute charts.

Timeframes and Indicators

When you use multiple chart timeframes you need to consider the impact this is going to have on your indicators.  Indicators that are set for long-term charts will not appear very well on the short-term charts.  The information they are going to give you will also vary depending on the chart timeframe you are looking at.

As you should be using different indicators for the different timeframes you may want to have two different charts that you use.  Some traders make the mistake of trying to simply change the timeframe of the chart they are working with.  When you use this method you are going to have to keep all of your indicators on the charts which will cause clutter or constantly reapply the different indicators.



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