It is very necessary for every traders and investors to do technical analysis before starting forex trading. If technical analysis is not done properly then there are chances of loosing money. You have to follow each and every step with cautious if you want to achieve success in the field of doing forex trading in currencies. Sometimes it becomes very easy and at times it is very hard. But if someone is doing forex trading in currencies by preparing proper forex chart analysis then the investors or the traders will be more consistent and will be in a position to do more profitable forex trades. Before doing forex trades you will have to keep certain things in mind which must be followed properly.
Some forex chart analysis tips before starting forex trading:
- Different methods of doing forex trading are there. You will first have to decide which type of forex trading suits you the best. You can make money in different ways by doing the forex trading. First take a right decision that by which way you wan to trade first. Different ways of forex trading are day trading, swing trading or to invest your money for a longer period. It is up to you that what you want to do? Whether you want to be a day trader, swing trader or want to become an investor for a longer term. It is up to you only that which type of trader you want to become. You have to analyse properly on this point.
- It is very essential for the trader to select the charting time frame. If any trader is doing day trading then he or she will have to focus on 5 minutes, 15 minute and hourly chart. If you are interested in doing swing trading then you will have to focus on the 15 minute, the hourly and the daily charts. And lastly if you are interested in long term investment then you have to spend your most of the time in monitoring the daily and the weekly charts. Monitoring these charts at every stage will lead you to follow the correct path and also avoid the condition of loss.
- It is must for the trader to do charting analysis in order. For each and every trading approach from the point number 1, it is must for the trader to look at their charts from the longer time frames to the closes. That means for the day trader it is must to look an hour chart first, after that 15 minute and then five minutes. The point behind looking the chart in this way is just to observe the trend of the currency pair before entering in the forex trade.
- Once you have established the trend of the forex trade then start your technical analysis to use the closes time frame. With the help of the technical set ups you can enter or exit a forex trade.
Doing forex trading against the trend is a very difficult and risky task. So it is necessary to follow the trend properly while doing the forex trade.