There is no magic with foreign exchange, but an understanding of the history of the currency market gives you a good idea of whether it is a good time to buy or sell currency. The use of forex graphs plays a role in predicting the likely future performance of a particular currency pair. It gives one a view of the past performance of a currency against another and can serve as an analytical tool that can help predict, the future performance of a currency all things being equal. Currencies are traded in pairs and there is no specific price for a currency pair since there is constant change in their rates.
THE USE OF GRAPHS
Graphs are very important tools in business analytics. They make information easy to understand and manage, and also provide a quick way to access a large amount of data. They also provide a historical review and good perspective of how well the business behind the forex rates has performed
THE IMPORTANCE OF FOREX GRAPHS
It is clear that forex can be very high-yielding in terms of return on investment of time and money, what is not yet clear is the importance of the tools that make for success in forex. For example, it takes a lot of research and looking into the past financial history of a currency pair to comfortably trade it and make a profit. This is where forex charts come in handy. They show you the trend in price per specific time frame. This information put you in the know of the past financial performance and arms you with the confidence to make predictions. These can lead to some outcomes for the trader which include
When a forex graph of a certain period is investigated alongside the major financial and political events of the time, it give a wide understanding and predictability of how similar event can affect such a pair of currency in the future.
- UNDERSTANDING PATERNS:
Hidden inside every forex graphs are patterns that can be very revealing to the forex trader. The effects of economic indices such as interest rates economic policies can easily been linked to specific financial out comes and by this we can be better educated as to the best time to buy or sell.
CONSIDERATIONS WHEN USING GRAPHS
In using forex graphs, you will most often need to make comparison between two different graphs to arrive at a particular objective.
- TIME FRAME
Pay attention to the specific time frames, they are varied and most times the one that will be more useful to the trader is the one with a short time interval such as five minutes for the currency you are considering.
- USE YOUR BROKER
In case you need help in the interpretation of the graphs or need any graph, your broker should be the right person to approach.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.