If you have decided to do your own Forex trading online rather than go with a traditional Forex broker, then you need to understand how Forex charts work and what they can do for you. Why is this important? Because by misunderstanding or misreading Forex charts you could lose rather than make money.

The first thing you need to do when using Forex charts is to figure out your position. Your position on the Forex charts has to do with whether you’re buying or selling the currency. If you’re selling, then you’re in the short position. If you’re buying you’re in the long position. In the short position, you want the currency to weaken and go down to make a profit. In the long position, it’s the opposite—you want it to go up and strengthen.

Two other items to notice on your Forex charts are the timeframes and the prices displayed. The timeframe is useful in helping you ascertain the trend that the currency may be following. The price that is displayed on Forex charts is going to be the bid rather than the ask price of the currency.

That means that if you’re looking to sell, then you know the price you’ll likely be selling at. However, if you’re buying the currency, there will be a slight difference as you’ll be paying the ask price.

You’ll also want to change the time zone on the clock on your Forex charts. It’s most likely set to the time zone of your Forex service provider and, if you don’t change it, you may not get important announcements in time to make your trades.

Understanding your Forex charts can only improve your chances to make a profit. By not understanding them though, it can cost you a lot.

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