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Introduction to Trading

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Currency Pair Trading

Technical Analysis

Introduction
Charts
Technical Indicators
Support and Resistance
Continuation Patterns
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Fibonacci and Elliot Wave

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CHARTS

The Graph or Price Chart is a succession of prices charted over a certain period of time. The vertical axis represents the price scale on the chart, whilst time is represented by the horizontal axis. The charts themselves contain various properties that are central to the information provided:

Price Scale

When displaying the price scale along the Y-Axis, there are two methods used; logarithmic and arithmetic.

The logarithmic scale has each point separated by a vertical distance equal in terms of percentage. An increase from 15 to 30 in a stock’s value represents an increase of 100%. An increase from 30 to 60 would also represent an increase of 100%, as would an increase from 60 to 120. All three of the increases would show on the chart as having identical vertical distance on the vertical axis.

The arithmetic scale displays each price point separated by the same vertical distance regardless of what the price level is. Every unit of measure is identical within the scale.

Time Frame

All points, bars, candlesticks and dots in a chart include information about a defined time interval. The length of the interval is the chart interval.

Which chart interval is used is dependent upon the individuals’ investment goals and style of trading. For the day trader, a chart interval can be as short as just one minute, whereas traders that hold positions for longer periods normally use intervals ranging from a few hours up to a day.

Three Types of Charts

The three main charts used by traders are the Bar Chart, the Line Chart, and the Candlestick Chart

The Bar Chart - This is a commonly used chart with rectangular bars whose lengths represent proportional values. The bars can either be plotted horizontally or vertically and enable more detailed analysis than can be found in regular line charts.

The Line Chart – Considered the most basic of all the types of chart.: a line is displayed in the chart connecting single prices over a predetermined duration of time. This is a chart that is particularly favored for daily analysis and provides a good representation of the price of an asset over a set period of time.

The Candlestick Chart - This is a chart that is very similar to the bar chart, with the candlesticks representing the four most important prices; open and close and high and low. The candles can represent a time period of your choosing. Within the platform software provided by ECMarkets the timescale can be:

1 min, 15 mins, 30 mins, 1 hour, 2 hour, 4 hour, 8 hour, daily, weekly and monthly.

The Candlestick Chart is the most popular technical analysis chart and the basis for many trading strategies.

HIGH RISK INVESTMENT WARNING: Trading Foreign Exchange (Forex) and Contracts for Differences (CFD's) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Please click here to read full risk warning. ECMarkets.com is a trading name of Safecap Investments Ltd, a Financial Services Company authorized and regulated by the Cyprus Securities Exchange Commission (CySEC) under license no. 092/08. Safecap Investments Ltd Is located at Treppides Tower, 6th Floor Kafkasou 9, Aglantzia P.O.Box 26522 CY2112, Nicosia, Cyprus.