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How to Read a Currency Chart
Forex Charts are easy to interpret, especially for someone that has invested in or day traded Stocks before. When looking at a real time Chart of a stock, the Trader has to select the Chart period (1 day, 5 minutes, 15 minutes, etc.) and the ticker symbol of the desired stock. The concept is the same for a Currency Chart.
The Trader would select the specific currency pair (U.S. Dollar versus the Japanese Yen, the Euro versus the Dollar, etc.) and the desired time period or timeframe for each bar of the FX Chart. The example below shows a snapshot of a real time 15-minute candlestick Chart of the Euro versus the U.S. Dollar (EUR/USD) currency pair taken from our Forex Day Trading System (This System can be used to obtain Free Forex Charts for 30 days and also to Practice Day Trading).
free forex charts - access currency charts for 30 days
The Forex Chart shows a strong two-day move to the downside in the Euro versus the dollar, from a high of of 1.3784 (on the 9:15 AM bar on October 4th - indicated by the vertical, blue bar on the left) to 1.3637 on the 6:30 AM bar on October 5th). This is a difference of 0.0147 or 147 pips (in Forex trading, a "pip" is the smallest tick in the price of a currency, which is similar to a "tick" in Stocks). In dollars, this move is equivalent to an amount of US$1,470 per lot for a standard lot, US$147 per lot for a mini lot, and US$14.70 per lot for a micro lot.
In our Forex Trading System, currencies are traded in lots of 100,000 (100,000 x 0.0147 = $1,470), 10,000, or 1,000 base currency units. With a margin requirement of only 0.2% (500:1 leverage), meaning $200 per standard lot, $20 per mini lot, and $2 per micro lot, a 147-pip profit corresponds to a return of over 700% if a maximum leverage is used. In other words, while a move from 1.3784 to 1.3637 is only about 1.1%, with 500 to 1 margin this return becomes over 700% (Please Note: Increasing leverage increases risk; in this example, a move of 1.1% in the other direction would have wiped out the account). In our Forex Education section we also explain how to read a Forex Quote and other Currency Trading Basics.
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