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October 1, 2013

Forex Training on OHLC Charts

Forex Training

OHLC is a type of bar chart. It is also considered one of the candlestick charts available to those in forex training and forex investments. OHLC stands for open, high, low, and close. It is a particular chart for the financial industry rather than any other. To read the chart one has to understand each vertical line is a “price range” in which the highest and lowest prices are shown for a specific unit of time. The unit can be one hour or a day. There are tick marks on the side of the line that are meant to show the opening and the close. For a traditional OHLC chart the left side line is the open and the right side line is the close. The bars can be different colours to make them easier to see.

Forex Training with OHLC and Candlesticks

Candlesticks are slightly different than your stock market OHLC. Candlesticks are typically used more in forex training and investments. A candlestick is a bar in which a wick on the bottom and a wick on the top are plotted. The bar can be long, short, or equidistant depending on the movement for the time period. It might be a little harder to read because the line for the open and close is not offset but based on the bar size and colour. For some investors it is easier to read the candlestick OHLC versus the standard OHLC.

The idea behind OHLC is to show a range of time with a price action providing the end result of that timing with regard to the price action. Sounds complicated, but basically it is meant to provide an open for that time period and to see if the close was low or high from the close, so that a trader can ascertain the direction of the price action for the currency pair. Forex training with these charts should be conducted in a demo account rather than with real funds. Once you have a handle on how the charts work and how to read them, you can start trading with technical analysis concentrating partially on OHLC charts.

Forex Training on More than Charts

Charts provide detailed information of what has happened in a given time frame. From this time frame you are supposed to look at about three others to determine how the pair has moved for a specific time as a means of figuring out where the price is headed for the currency pair. Yet forex training just on charts like OHLC is not enough. Investors do have a power over the market and can manipulate it to go their way, but it is only when a lot of volume is invested on the same price movement. It is not easy to predict if investors are going to hop on the same train or if they will get off and start a new train.

It is the reason that your forex training should include fundamentals too. Learning to read fundamentals like political, natural, and financial changes is important since they can all manipulate the forex market reactions.




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