The first thing that a trader needs to get comfortable with is the generic trading chart, often candlestick in appearance. From the chart which normally just has time and prices on it initially, you can begin adding particular indicators that will allow you to highlight signals that you are waiting for.
The standard charting software usually has the candlestick chart displaying green candlesticks for a positive price move and a red candlestick for a negative negative price move. When viewing a candlestick chart you should be mindful that the body of each candlestick corresponds to the opening price and the closing price. The lines that are called shadows at both ends of the body show the high and low points of the session. When the candlestick lacks any shadows attached it denotes that the closing price of the session was the highest (green) or lowest (red). To give you a bit of an idea, there are over of 20 key patterns that are commonly used by professionals. It would be a good idea to learn these patterns and what they mean when they appear.
Bollinger Band Indicator - Offers help to a trader or analyst obtain a comparative definition of a high and low. A currency price is considered high at the upper band on the chart and low at the lower band on the chart. The nearer to either band increases the likelihood of a trader taking action and placing a trade. Depending on whether it is the upper or lower band will dictate a buy or sell order. An alternative strategy is to buy if the price breaks above the upper band and sell when the price falls below the lower band. It is here that a trader needs to make the correct call from the signals shown in order to be successful.
The Relative Strength Index is another popular indicator to use. The strength and weakness of historical and current currency prices are calculated here based on the data of finished trading sessions. A currency usually ends the session higher pointing toward a stronger market and conversely will close lower indicating a weaker market.
Moving Average Convergence Divergence - MACD The MACD helps the trader look at the speed of change in the moving average of closing prices. This certain indicator looks at trends and clearly points to a reversal in trend when the MACD line passes zero on the chart or crosses the price line or if there is a divergence with the price line and the MACD line. Depending on whether the MACD is moving up or down at the point of crossing through the zero or signal line indicates a buy or sell respectively. There are other signals that can be taken from the MACD indicator according to the distance between lines and their direction.
Unless you invest in a forex robot to analyze and calculate trades on your behalf you will need to get a detailed understanding of charts as well as the numerous signal indicators required to work out"calculate a profitable trading method.
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