Candlestick is close related to bar chart but it also contains price direction information. The candlestick bar consists of the body and the shadows.

Schematics of candlesticks
Opening and closing price makes up the body of the candlestick. When the opening price is lower from the closing price the body is left blank or white. When the opening price is higher from the closing price the body is filled with color (this color depends on the trading platform).
Upper shadows shows the high of the price and lower shadow shows the low of the price for the time span the trader selected in his chart.
Certain candlestick patterns have prediction qualities. Look at the figure below of a candlestick chart in real market environment.

A bar chart is one of the most popular charts. It contains plenty of information about the price movement of the currency pair. The structure of a price bar is shown in the figure below.

The high and low prices are united by the vertical bar. The opening price is marked by a little horizontal line in the left of the vertical bar and the closing price in the right of the bar. With bar charts you have better visualization of the market movements so that’s why bar chart is the first choice for most of the traders. Below you can see a real market examples of bar chart.

In line charts price is displayed as a point in the map. The consequent price points connect through a line called price line. This type of chart is characteristic of the trend of the price of the currency but provides little supplemental information. This type of charts is rarely used by modern traders (after reading this book you will understand better why you shouldn’t use this type of chart). Line charts have different time periods. The time period you select is the point to point price period. The bigger time period the wider in time the chart will be. The most popular line chart is the day line chart.
Below you can watch an example of line chart.

Maybe you have once not used stop loss order. Maybe you do not have a strategy or system or you have one but you do not stick to it. Or maybe you traded just before a serious fundamental announcement. Forex has some traps. You do not have to lose in order to learn to avoid these traps! Click here to donwload this article from Brian Dollan published in Stocks, Futures, Options magazine this month(found in public domain). It is very educative!

Should you choose technical analysis or fundamental analysis? It depends solely on you. Never listen to self proclaimed Forex gurus. Forex trading is a personal choice and your style is one of your choice. Do you prefer the practical technical analysis or are you more fundamentalist? It depends on your attitude to choose.

One of the best books for getting introduced to Forex is the “Day Trading the Currency Market: Technical and Fundamental Strategies To Profit from Market Swings” by Kathy Lien. You could find it at Amazon.com. It is very informative but not too difficult to grasp. Nice book for novice or intermediate Forex traders.

Forex has bloomed the last years through internet. Some time ago Forex was the priviledge of very wealth individuals but now anyone can have access to Forex market. As with everything that has so great success in so little time a lot of scam has evolved.

Avoid being scammed following these advices:

If you are interested in a new broker see if it follows the rules of FFC, if the broker has real offices. Watch the design of the site and the support. If it does not wins your trust maybe you shoulden’t trust it.

Watch out for people that say you could become millionaire through Forex in just a few days or even months. The concept is to be profitable month after month not millionaire within a few trades. Watch out for people that promise utopias…

Search a lot before buying a book. Some of them may mislead you some of them may be very technical. You need something informative not something misleading.

Always remember: In the land of promises few have found gold!

It is possible to win your financial freedom through Forex. It is not easy to become a millionaire through Forex. Keep your eyes open for the scam hawks!

Would you like to express your opinion about the way of Financial Freedom through Forex? Join my Learn Forex Group

You started a demo account. All you see now is some numbers, some currencies, a chart that looks all the same. You hear about some fundamentals and so on. Then? You feel lost. You may have lost money in your demo account. You do not understand what is happening. You may feel that this is not for you…

This is not true. You have to educate yourself first. Understand the basics of Forex market. Learn to analyse charts. Learn trendline analysis. Then you could find information about technical indicators. After all you should study fundamentals. These all are not so difficult and you do not need a Masters in Economics to understand. You just need the right source of information!

Forex is a fascinating market. Prepare yourself for the adventure of your life!!

How can a trader make a profit from Foreign Exchange?

The most important for a trader is the meaning of the value of a currency pair. For example EUR/USD 1.2640 means that you can buy 1.2640 USD with 1 EUR. Remember: An easy rule to remember what this price means is to translate the numerator (EUR) in 1 and take the currency value to be the denominator. Some currencies have special names like Kiwi for New Zealand Dollar, Cable for Great Britain Pound and Aussie for Australian Dollar. If you become an active Forex trader you will hear these names often.

If I tried to explain you the mathecaticals behind Forex transactions you would get confused. I know it would sound like greek to you for now. But remember this rule of thumb, it is all you have to know: You buy in Forex when you believe that the currency pair value will appreciate (long position). You sell in Forex when you believe that the currency pair value will depreciate(short position). It is not so difficult, is it?

These are some forex basic forex terms that cause a lot of confusion to amateur forex traders. We will try to give simple and practical definitions.

Margin practically is the money you have deposited in order to trade. If your money is depleted then you may have not sufficient margin in order to trade.

Leverage is called the factor that mupltiplies your margin in order to realize more profits from your trade. When a broker offers a leverage e.g. 400:1 this means that for every dollar in your trading account you can trade 400 dollars due to temporary borrowing of money from the broker for as long as your trade lasts. For example if you deposit 1000 dollars in a trading account with leverage 100:1 this means that you can practically trade as if you had 100,000 dollars. This is very important in Forex because you trade the last decimal change in the currency pair value so you need a large amount of money in order to realize a decent profit.

When you buy you are “long” in Forex language. When you are long you want the currency pair to appreciate in order to make profit. Long positions are profitable when the market is bullish that is the direction of the trend is upwards. When you sell you are “short”. When you are short you want the currency pair to depreciate in order to make profit. Short positions are profitable when market is bearish that is the direction of the trend is downwards.

The last digit of the price in a currency pair is called pip. In EUR/USD 1.2640 the 0 digit is called pip. More specifically the change of the last digit in one unit is called one pip change. The pip numbers in Forex is the indicator of your profit or loss. In Forex you trade the last decimal change in the price of currency pair.

A limit order is an order to trade a currency at a specific value either short or long. This order remains valid for as long as you want until the currency reaches the value that you have specified. Stop loss is an order to exit a trade at a specific currency value according to risk appetite. With stop loss you can minimize you losses. Limit and stop orders can automate your trading without the need to be in front of the screen all the time.

Trading is not an easy thing to do. You have to educate yourself first.
If you would like to test Forex with no cost at all a lot of Forex brokers are giving you the option to trade with demo account. A demo account is called demo because you can live the experience of Forex with no real trading involved. The trades you setup are not passed to the market but all the rules of Forex trading environment are there.
Demo accounts are the accounts that amateur investors are using in order to learn forex before applying their knowledge to real environment. Try it yourself! See it as a game. You may win or you may lose. But you will see what is Forex all about!