Trains, train signals, and train tracks make a wonderful analogy for the forex market. You have different tracks you can take, based on the forex signals you see. Yet, as the conductor of your money train you had to know what to look for. A failure to read the signals correctly could have you on the wrong track. You might take a curve too suddenly or find out the track is not completely built. Runaway trains and no tracks always lead to death in a real train incident. In forex it means a loss of your capital investment. The following is going to discuss different ways to recognise trading signals.
Forex Signals from Graphs
Graphs are the standard type of chart you will see in an online platform. Price points are graphed on a chart showing an increase or decrease for the rates. The points made on the graph are always based on the market rate that occurred on a specific date. The timing of the chart is up to you. There are day, week, month, and longer charts for you to examine. Forex signals are best assessed on the short term because of the quick movements in the forex market. In an hour it is possible to see several signals, but you have to realise the profit found may not be through the long term trend. A signal for a slight downturn on a line graph might be read, but it may not last more than a few minutes. It is risky to consider trading on the quicker movements until you have experience.
Rather than focus on the quick changes, you just need to be aware right now that there are different charts that can lead to different types of forex signals. You won’t find triple tops or bottoms in a candlestick chart, but they do exist on a line graph. Most line graphs will have the time span on the horizontal axis, with the rates to the right on the vertical axis. When the rates increase it means the quote currency is losing strength against the base currency. Always keep in mind that the base currency is equal to 1 in a currency pair. If the rate is 1.3457 it means you need that much of the quote currency to make 1 of the base currency. This is true of candlesticks too.
Forex Signals in Candlesticks
Candlesticks are a much different type of chart. It is based on bar graphs, which are not the standard for forex. Forex signals on bar graphs are much different than graphs. Candlesticks are bars, with two tails. You have an upper and lower tail. The length of the tails versus the bar in the middle determines what is going to happen in the market according to professional traders.
The bar is meant to represent the open and close. The bars are also coloured or not coloured based on what they represent for the day’s forex signals. You can still use candlestick charts to draw lines although it is different than your usual line graph.
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