Learn Currency Trading

The first thing to determine when you first learn currency trading is whether you want to be a short term or long term trader.  Personally, I like trades that last 3 to 7 days but I will occassionally place long term trades when we have a major directional shift in the market.  Currency markets usually trend in one direction for a very long period of time, often for several years. If you are a long term currency trader, you must simply follow these long term trends buying when the market tests support lines or moving averages.

The following chart is a monthly chart of the Euro Currency, as you can see the Euro tends to trend in one direction for long periods of time.  Following a 6 year downward move from mid-1994 to 2000 the Euro began an upward trend in 2002 that lasted 6 years topping out in 2008.  This chart has 20, 50 and 200 month moving averages overlaying the prices. 

If you aren't familiar with currency quotes and prices you may want to learn the basics of currency trading before continuing to the next section.

Monthly Euro Chart

This monthly euro currency chart shows the major long term trends in the euro.  In order to learn currency trading you must first learn to be a trend follower, otherwise your trading will be an exercise in futility.  Based on the monthly chart you would be a bit cautious until the Euro establishes a monthly close above the red 20 month moving average.  A close above that level would signify the re-emergence of the bull trend with the first price target being the 2007 high of 1.60

Learn Currency Trading Using A Monthly Chart

Weekly Euro Chart

Here is the same currency market ( The Cash Euro ) price data in a weekly chart. Once again we have overlaid the price chart with the 20, 50 and 200 week moving averages. You can clearly see that 90% of the price action during the multi-year uptrend was above the 20 week moving average. Therefore, as an investor or speculator you would've used that area as an entry point. Right now, you can see that the market appears to be in the process of re-establishing an uptrend as the 20 week moving average is just starting to move above the 50 week and 200 week. Based on the weekly chart a currency trader you would want to buy the Euro as close to the 1.35 level as possible since all 3 major averages would provide strong support in that area.

Learn currency trading using a weekly chart

Daily Euro Chart

This is the daily price chart for the Cash or Spot Euro Currency, on this chart each bar represents one day of trading. As you can see, the breakout from the consolidation happened in early May when the Euro broke above the 200 day moving average and held the downside test of the moving averages. This triggered a strong rally up to the 1.43 resistance on the monthly chart. Right now the market is being supported by the 50 day moving average ( green line ). Based on this chart you would have to buy the euro here with a stop at approximately the 1.375 level. If that area failed to hold then the market should drop down into the 1.33-1.35 level which provides strong support on both the daily and weekly chart.

Learn currency trading using a daily chart

Hourly Euro Chart

The hourly bar chart (each bar represents 1 hour of trading) shows how choppy the market has been over the past two weeks, caught in a range between 1.38 to 1.42. Based on this chart you again would want to buy near 1.38 which is also supported on the Daily chart.

Learn currency trading using a hourly chart

5 Minute Euro Chart

This 5 Minute bar chart shows just 1 1/2 days of trading, each bar represents 5 minutes worth of price action. This is the type of chart used if you are going to manually Day Trade the currency market. Due to the fact that you would have to sit and constantly monitor the market, most currency day traders use an automated currency trading system.

 Learn currency trading using a 5 minute chart