SigmaForex Forex Currency Trading Tips And Hints

Hi, on this occasion we will show you how to read Forex charts and the basic points associated with it. First of all, you always quote currency pair in the same way. For example: the EURUSD currency pair is always as EURUSD, with the EURO being the base currency and the USD being the terms currency and not the other way around. Therefore if the chart of the EURUSD shows that the current price is fluctuating around 1.2155, means that 1 EURO will buy around 1.2155 US Dollars.
YOUR TRADE SIZE (FACE VALUE) IS THE AMOUNT OF BASE CURRENCY THAT YOU ARE TRADING. IN THIS EXAMPLE IF YOU ARE BUYING 20,000 EURUSD, YOU ARE THEREFORE BUYING 20,000 EUROS.
BUY OR SELL
LONG POSITION: When you buy the currency pair looking at their chart to go up to profit on the trade. That is, you need the base currency to strengthen against the terms currency. SHORT POSITION: Is the reverse of the above. Sell the currency pair to short the position. You will be looking at the chart of the currency pair to go down to profit from your trade. That is, you need the base currency to weaken against the terms currency.
TIME OF ENTRY TO A TRADE
Always check the time frame displayed. Many trading systems will use multiple time frames to determine the entry of a trade. For example, a system may use a 4 hours chart to determine the overall trend of the currency pair by using indicators such as MACD or support and resistance lines, and a 5 minute chart to look for a rise from a temporary dip to determine the actual entry.
Make sure the chart you are looking at, has the correct time frame for your analysis. We suggest that you set up your charts with the correct time frames and indicators on them for the system you are trading, saving and re-using this layout.
BID AND ASK PRICE
On most Forex charts, it is the BID price rather than the ASK price that is displayed on them. A price is always quoted with a BID and an ASK (offer). For example, the current price of EURUSD may be 1.2065 BID and 1.2068 ASK (offer). Then you buy at the ASK, which is the higher of the 2 prices in the spread (range between BID and ASK), and you sell at the BID, being the lower of the 2 prices.
From the chart, you place an order to sell when the price is 1.422, then this is the price that you sell at assuming no slippage. You place an order to buy when the chart price is the same price, you will be buying at 1.422. The system will determine if your orders will be placed according to that chart price or if you need to add a "buffer" when trading (buying or selling).
NOTE: On many platforms, when you place a stop order(to buy if the price rises above certain level) or sell (if the price falls below a certain level. You can choose either "stop if BID" or "stop if offered".
WORLD TIMES
The times shown on the bottom of Forex charts are set to the particular time zone that the Forex provider's charts are set to, GMT, New York time, or other. It is a suggestion to have a world clock available on your computer desktop particularly if you are waiting for announcements from Central banks or Governments around the world which could affect the currency prices.

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