How To Learn To Read Forex Charts Quickly
Forex charts are used by traders around the world for analysis. Traders can speculate on the future price movements based on several technical patterns seen time and time again in the markets. Charts are incredibly useful and provide a look into the market movements, but reading charts is not always easy. In fact, many traders get put off from trading due to the complexity of understanding price charts.
In this article, we’ll look at exactly how you need to learn to read forex charts if you want to get up to speed as quickly as possible! So, let’s get into it…
Learning To Read Forex Charts
Learning to read charts is like learning a language. It doesn’t happen overnight. Ultimately, reading charts will be paramount to your success in the markets as a retail forex trader – without this skill being honed, you’ll struggle to make progress. Regardless of your trading strategy, this will be a key cornerstone for you to have in place. Many newbie traders lack this skill and often don’t see trades developing until it’s too late, and the trades have already taken place. Luckily, reading charts is not something that has to take years to learn. In fact, with the right strategic approach, learning to read the charts can be done relatively quickly. This doesn’t mean you’ll be profitable, as we aren’t talking about your specific strategy, but you’ll at least be able to navigate setups quickly.
How To Learn To Read Forex Charts Quickly
We’re going to discuss the exact approach we recommend beginners take when looking to learn to read charts. This should get you from point A to point B as quickly as possible…
- Pick A StrategyFirstly, you need to pick a strategy to look at. This doesn’t need to be the strategy you ultimately trade, you just need to focus on a strategy whilst you start learning to read the charts. This should be something simple like trend line breaks, EMA retests or supply and demand. We are not looking to make a profit with these strategies, so you will not even need a live trading account at this point in the journey. Many traders do this part wrong and try to learn everything at once, which drastically slows down the process. Learn one thing at a time, and learn it well. Remember, you aren’t actually learning the strategies, you’re training your brain to be able to break down charts quickly in real time.
- Back test ChartsNow it’s time to look at your strategy on the charts. To learn the fastest, you will want to be looking at thousands of example trades. Depending on your strategy, that may take months or even years to come about. This is why we use back test charts and past data.On your trading platform of choice, scroll through the past data and identify times when your strategy/setup took place. Mark these on the charts with the relevant indicators, as if you were trading them. Repeat this process hundreds, if not thousands of times, identifying each setup. You can use as many time frames and pairs as needed to gather the examples. Once you’ve done this and feel relatively confident, you’ll want to back test. There are plenty of back testing tools on the market that allow you to trade past data in real time, but sped up. Meaning, instead of a daily candle taking a day, it can take just seconds or minutes. As you work through years of back test data, continue marking up and identifying the setups in real time. Ideally, you’ll want hundreds of examples to build your skill set.
- Paper/Demo TradingOnce you’re done with the back testing, it’s time to find the setups in real time on live charts – where you cannot pause or rewind. We recommend setting up a demo account with a broker for this step. There is a minimal chance your strategy is profitable, so we advise against wasting real money at this point. Work through trades in real time, identifying the setups and placing trades. The outcome is irrelevant, the key benefit of doing this is purely building your skill set.
- Repeat With Further SetupsNow you’ll want to rinse and repeat this process with other strategies. For example, if you used trend line breaks, now use support and resistance trades. Over the course of a few weeks or months, you’ll have knowledge of a lot of trading setups whilst having built the skill set to identify trading opportunities in real time, reading the charts.
How Long Will It Take To Understand The Forex Charts?
Ultimately, the length of time this will take depends on you and how many hours you can dedicate to your forex trading learning. For some, it’ll take a few weeks. For some, it’ll take 6 months. The more hours, the better. It should go without saying that learning this skill, to this level, will not make you a professional trader. Many of our prop firm funded traders have thousands of hours of chart time, so it’s just second nature at that point. However long this process takes for you, we can’t recommend enough the importance of spending time here in the learning stage. As we say, this really is the cornerstone of your trading journey. No strategy will work for you if you cannot spot trades in real time and execute effectively.
In Summary – How Can You Learn To Read Forex Charts?
In conclusion, you can learn to read forex charts quickly if you use a structured approach to your learning. This will drastically cut down on the learning curve, and you’ll be reading the charts in no time.
Once you’re able to read the charts, you should be finding a profitable trading strategy, then potentially looking to become a prop firm funding trader.
If you’re looking to become a prop firm funded trader, work with Lux Trading Firm today!
