| As you read forex charts, remember that the two | | | | The same is true with wicks. Candle wicks come by |
| fundamental approaches for online forex trading: | | | | many difference sizes; there may be no wick at all. |
| fundamental analysis and technical analysis. | | | | The length of the body and the length of the wick |
| Fundamental analysis doesn’t rely on forex | | | | are determined by the price range for the candle. |
| charts. It scrutinizes political and economic indicators | | | | Longer candles will have had more price movement |
| to determine trades. Charts here are deployed as | | | | during the time that they were open. The top of a |
| used as a secondary reference. | | | | candle wick is the highest price for that currency |
| Technical analysis on the other hand, attempts to | | | | while the wick’s bottom is the lowest price. A |
| predict price swings by analysis of historical price | | | | currency is bullish when the close of the candle is |
| activity. Those who use technical analysis study the | | | | higher than the open. In simple terms this means that |
| relationship between price and time. | | | | there were more buyers than there were sales |
| The most actively traded pair of currencies is the | | | | during the opening time period. Sometimes the |
| Euro and the US dollar, so we will use them in our | | | | candles will not have wicks. The price opened and it |
| example. The dollar is on the right hand side of the | | | | dropped off until it closed. |
| chart and the Euro is on the left hand side. The | | | | Forex charts don’t offer bullet proof trading |
| currencies are expressed in relationship to each other | | | | hints, but they can help a trader. Past trends do have |
| in pairing. Forex charges will always display how much | | | | their place in forex trading as most traders will admit, |
| of the currency on the right hand side is necessary | | | | and using the charts to track historical trends can |
| to buy a unit of the currency on the left side. | | | | assist a trader in making a snap decision. |
| Looking at the typical EU-USD, chart you will notice | | | | The online investor typically joins a service that |
| the last price displayed per given date. This number is | | | | provides realtime charts that updates on currency |
| always emphasized. The time is tabbed horizontally | | | | activity. Charts can be checked on a minute to |
| across the bottom of a chart and the price scale is | | | | minute basis. For those who primarily do their trading |
| displayed vertically along the right hand edge of the | | | | based on historical accuracy this can ease the burden |
| chart. The time and the price are set in all caps to | | | | of prediction. |
| help the trader remember that technical analysis rests | | | | Most forex traders however use a combination of |
| upon the relationship between time and price. | | | | fundamental and technical analysis. They may chart |
| The trader observes the price and time movement | | | | historical trends, but they will also pay close attention |
| on a chart. These include bars, lines, point and figure, | | | | to political, cultural and economic indicators within a |
| and Japanese candle sticks-- the most favored | | | | region. They might use charts and other techniques |
| method. With the candlestick method there is a | | | | to check correlation between political climate and |
| large, red section that is the body of the candlestick. | | | | currency fluctuations. But even the most |
| Lines protrude from the top and bottom and they | | | | sophisticated technical analysis software or tool has |
| are the upper and lower wicks. When you look at all | | | | its limitations. A trader must be prepared to take |
| the candles on a chart it is apparent that bodies | | | | risks… and invest money that is not needed for the |
| come by difference sizes. Sometimes no body exists | | | | immediate future. |
| at all. | | | | |