Forex charts look similar to stock and futures charts. If an investor wants to see the historical chart of a stock, all he has to do is specify the stock's ticker symbol and the period of the chart (10 minutes, 1 hour, 1 day, etc.) that he wants. Pulling up a chart of a currency is the same thing, but instead of the stock symbol, the trader enters the desired currency pair he wants to graph (EUR/USD, USD/JPY, GBP/USD, etc.). Look at the real time FX chart example below. It was obtained from our live trading platform and it shows the price of the euro versus the US dollar on a 15-minute time frame (each green and red candle represents 15 minute's worth of prices). Interpreting charts is part of the free forex training that we provide customers who open a trading account with US$50,000 or more (click here to register for a free live demo of our forex software that includes live charts).
Example Provided Only for Numerical Purposes (this was not an actual trade): The forex chart above shows the price of the EUR/USD during December 27, 2004. It shows a strong move in the euro from a low of 1.3523 to 1.3639; a difference of 0.0116 or 116 pips (read about currency pip values and calculating profit in forex here). One hundred and sixteen (116) pips is equivalent to $1,160 dollars, since each pip is equal to US$10 for the euro us dollar pair. Since the margin requirement for standard lot is $1,000 euros (1% of the lot value = 1000 euros = US$1,352.3), a gain of US$1,160 represents a return of approximately 86% on a margin requirement of $1000 account. Even though the move in the foreign exchange rate from 1.3523 to 1.3639 was only about 0.86%, with a 100 to 1 margin requirement, it becomes a return of 86%; that is, it gets multiplied one hundred times (increasing leverage increases risk. If the price would have moved by the same amount in the opposite direction, a loss of 86% would have ensued). If you do not completely understand this example, please read the sections on forex quotes and calculating profit and loss in forex trading.
Example Provided Only for Numerical Purposes (this was not an actual trade): The forex chart above shows the price of the EUR/USD during December 27, 2004. It shows a strong move in the euro from a low of 1.3523 to 1.3639; a difference of 0.0116 or 116 pips (read about currency pip values and calculating profit in forex here). One hundred and sixteen (116) pips is equivalent to $1,160 dollars, since each pip is equal to US$10 for the euro us dollar pair. Since the margin requirement for standard lot is $1,000 euros (1% of the lot value = 1000 euros = US$1,352.3), a gain of US$1,160 represents a return of approximately 86% on a margin requirement of $1000 account. Even though the move in the foreign exchange rate from 1.3523 to 1.3639 was only about 0.86%, with a 100 to 1 margin requirement, it becomes a return of 86%; that is, it gets multiplied one hundred times (increasing leverage increases risk. If the price would have moved by the same amount in the opposite direction, a loss of 86% would have ensued). If you do not completely understand this example, please read the sections on forex quotes and calculating profit and loss in forex trading.
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