Charting Your Forex Success!

Using charts in forex trading is something that is done by the technical forex trader. A forex trader who is concerned about doing technical as well as fundamental analysis of his trades will want a chart made of reliable data to give him an idea of the trading opportunities available to him. A risk-reward profile that is beneficial to a forex trader will be indicated in reliable chart formations. Technical analysis of these charts will help a forex trader identify trends and spot profitable opportunities.

The best time frames to look at when doing forex trading are long term charts. Foreign exchange trading trends last for months at length. Watching multiple time frames allow you to time the market well and catch breakouts. Weekly charts are often considered as the best time frames by the expert forex trader as these charts show a bigger picture than daily charts that do not really amount to anything substantial in terms of showing trends in the foreign exchange market. Day traders are not really known to make money in the foreign exchange market over the long term.

A look at the American dollar and the Canadian dollar's weekly chart would show how resistance and support levels can be set up in the foreign exchange market. Using stochastic indicators, you will see how the short term momentum looks by looking at stochastic lines. This type of momentum trading can help you profit from the market volatility in short term positions in upward trends and then moving your capital to a new position at the downward signal. These are times when patience can prove to be profitable. Watch the stochastic for the right signal rather than anticipating the cues. The stochastic momentum can effectively time your entries for profitable forex trading opportunities.