Currency Exchange
Location :: Foreign Exchange News » Currency Exchange » Learning To Read Foreign Exchange Charts
Learning To Read Foreign Exchange Charts
Foreign currency trading all seems so straight forward on paper – it’s a different matter putting it all into practice. The charts you see whizzing by on Bloomberg bear little relation to what you’ve learned. This is often because they include data such as YTD (year to date) figures. This data is important to currency brokers, as it tells us how the economy is affecting currency exchange rates. However, here we’ll just concentrate on currency pairs charts.
Currencies are expressed as base and terms pairs, with the base quoted first. For example, if the chart shows GBP USD 1.6354, this means the GB pound is the base currency, and £1 will buy $1.6354. Your trade size is the face value of the base currency you’re trading.
When we at Pure FX perform currency exchange, there are a lot of factors involved. If we are buying the currency pair we want the chart value to go up, in order to get a profit. In other words, we want the base currency to strengthen against the terms currency. If we are selling to short the position, then we want the chart value to go down.
What about the bid and ask price, you ask? Remember, when involved with foreign money transfer, two figures are quoted: the price Trader A wants to buy at (the bid price) and the price Trader B wants to sell at (the ask price.) The difference between the two is the spread. On foreign exchange charts, it is generally the bid price only that is shown. If you are selling, you sell at this price. When buying, however, you buy at the ask price.
I will certainly recommend your service as it is far more competitive than the bank rates offered and will be looking to you again in the very near future.
