currency charts
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Currency Charts

Foreign currency charts are easy to interpret, especially for previous stock and futures traders and investors. To see the price history of a stock in chart form, a stock trader has to specify the ticker symbol of the stock, the chart period (1 day, 1 hour, 15 minutes, etc.). In the forex trading market, this charting process is no different, with the exception that instead of specifying a ticker symbol, the currency trader specifies the currency pair he wants to trade. For example, a currency day trader can pull up a real time foreign exchange chart of the euro versus the dollar using 30-minute periods. The example below shows a snapshot of a real time 15-minute candlestick chart of the euro versus the dollar (EUR/USD) currency pair taken from our online currency trading system (sign up for a free 30-day trial of the trading software today and practice trading using different currency charts). [Interpreting charts to trade is part of the FREE forex training that we provide to customers].

exchange rate chart

The exchange rate chart above shows the price action during December 6, 2002. On December 6th, the currency chart shows a strong move in the Euro versus the U.S. Dollar, from a low of 0.9869 (about 8:30AM EST) to 0.9975. This is a difference of 0.0106 or 106 pips (read more information on the value of a pip for different currency pairs and calculating profit and loss when trading currencies). In dollars, this move is equivalent to an amount of US$1,060 per contract (lot). The way we arrive at this figure is by multiplying the standard value of one lot (100,000) by 0.0106 (each pip is worth US$10 for the EUR/USD pair). Since the margin requirement provided by Currency Trading USA is only $1,000 (i.e., 1% of the contract value), a gain of $1,060 represents a return of approximately 106% if the minimum margin amount is taken into account. Even though the move in the foreign exchange rate from 0.9869 to 0.9975 was only about 1.1%, with a 100 to 1 margin requirement, it becomes a return of 106% (please note that the same move in the other direction could lead to a loss of the entire account. Increasing leverage increases risk). If you do not completely understand the example above, please read the sections on how to read a currency quote and calculating profit and loss in when trading the currency markets.

More on FX Charts

If a day trader takes a quick look at the chart below, he might mistake it for the chart of a stock. He might argue that the chart depicts the daily price action of a stock with a price of 124.50. In reality, the picture below shows a daily candlestick chart of the U.S. dollar versus the Japanese yen during a period of three months. On the right axis, the number 124.50 is the last price of the USD/JPY currency pair, which means that 1 dollar is equal to 124.50 yen (foreign exchange rate).

Since charts of foreign currencies are very similar to stock charts, a stock investor that wants to day trade currencies can easily adapt to foreign currency charts. If the trader feels like the dollar will gain value versus the yen, he simply buys. After that, if he sees the new candles of the chart going up (124.75, 125.32, 126.22, etc.), he knows that he is in a profitable trade.

forex chart

The four colored lines (blue, pink, green, orange) shown on the chart above are called "simple moving averages (SMA)." A simple moving average is an arithmetic average of the price of a currency pair over a certain number of time periods. The moving averages shown above are the 10-period, 20-period, 50-period, and 200-period moving averages; in other words, the average price of the currency pair over the last 10, 20, 50, and 200 days respectively. Moving averages are part of "technical analysis:" the study of past prices to determine the probability of what current prices are going to do next. Technical analysis is the core of currency trading and is included in the training we provide our customers. Click here to read more about technical analysis in currency trading.

Free Currency Charts

Have you noticed the similarities between charting stock and currency prices yet? If you understand how to read currency quotes, you can begin to trade currencies using technical analysis. Trading currencies has many advantages over trading stocks (click here for the advantages of forex trading), including the fact that you only have a few mayor currencies to trade versus thousands of stocks. If you read the example after the first chart on this page, you would have also realized that more money can be made trading currencies because of the higher leverage involved (100 to 1). Please note that a lot more money can be lost as well if the price goes against the trader (increasing leverage increases risk).

To get access to free real time currency charts, you can sign up for our online trading simulator. This simulator not only will let you play with charts of different currencies in real time, but it will also allow you to practice your trading by executing buy and sell orders at actual exchange rates. This is the best way for you to learn how to day trade or swing trade currencies. The free training that you can receive also includes how to utilize fx charts in your trading.

Get access to free currency charts by signing up for a FREE 30-day trial of our forex trading software...

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