Forex training for beginners - acquaintance with the trading terminal
Learning to trade from scratch - how to trade Forex in the MetaTrader 4 trading terminal, what types of Forex charts are, what are Bid and Ask prices, how to set up a chart and create templates.
Hello friends! Training in trading is one of the first steps that you need to take before you start trading on Forex. When you get a job without the relevant experience, the first thing you do is go through training. So here, without learning to trade from scratch, you can’t start to consistently make money on Forex. On the contrary, Forex training will allow you to become an effective and profitable trader.
In this guide, we will introduce you to the MetaTrader 4 trading terminal. You will learn what types of graphs are and how to read them, learn how to open and configure graphs, as well as do analysis on different timeframes. Familiarity with the trading terminal will allow you to be more productive and speed up the learning process at Forex.
Forex for beginners - opening a chart in the MetaTrader 4 trading terminal
So, after you chose a broker for Forex trading, you need to go to your trading platform and open the chart. For practical purposes, we will use MetaTrader 4 as an example in this guide. In addition, MT4 is the most recommended platform for starting Forex trading for beginners. However, the described process is very similar if you use MetaTrader 5 or other trading platform.
To open a new chart, select a currency pair in the "Market Watch" window, right-click on it and select "Chart Window".
In addition, you can click “File” - “New Chart” or the button on the standard toolbar, which is usually located in the upper left corner of the MetaTrader 4 window. Then you can go to the choice of a currency pair:
After performing one of the above actions, you will receive a new chart showing the price changes of the selected currency pair. If you don’t like the color scheme and type of chart, don’t worry, we will tell you how to customize the chart and create your own template.
Trading for beginners - the main elements of the Forex chart
The Forex chart illustrates price changes on a particular currency pair. There are two axes: the vertical Y axis represents the price, and the horizontal X axis shows the time span.
Here's what it looks like in the MetaTrader 4 trading platform:
As you can see in the image above, the price movement is developing from left to right, so the latest price information will be displayed on the right side of the chart. Labels on the X axis represent a certain period of time, which may vary depending on the timeframe that you choose for your schedule (minutes, hours, days, weeks, or months).
Price levels are shown on the vertical Y axis on the right side of the chart. Values will depend on the currency pair you want to trade. However, they all move in units called points.
To determine the direction of price movement, use the following observations:
- If you notice that prices on the chart are rising from left to right, this indicates an upward trend;
- If there is a decline, then you are likely to observe a downward trend;
- In addition, the market may exhibit lateral behavior or a horizontal trend if prices fluctuate within the price range.
See also rating of reliable Forex brokers.
Trading from scratch - choosing the type of Forex chart
There are three main types of Forex charts:
- Candlestick chart.
- Line chart.
To select one of these options in MetaTrader 4, click on the type of chart you need located on the standard toolbar:
Forex Training - how to read a bar chart?
Bars consist of vertical and two horizontal lines. The extreme points of the vertical line represent the lowest (L) and highest (H) price levels for a given time period. Two horizontal lines describe the levels of open price (O) and close (C), respectively. Therefore, you will often see a bar chart called OHLC Bars.
The figure above shows a chart consisting of one bar. This is how a chart of several bars will look like:
In most cases, the bars have a different color depending on whether they are bullish or bearish:
- Green bars - are bullish or rising bars, which means that the closing price is at a higher level than the opening price.
- Red bars - are bearish or falling bars, which means that the closing price is lower than the opening price.
Training in trading - how to read the candlestick chart?
If we add a rectangle shape to the OHLC bars, we end up with a candle bar.
Instead of one vertical and two horizontal lines, we have a rectangle that symbolizes the body of the candle. Depending on the color, the beginning and end of the body of the candle represent the price of opening or closing the bar.
If the body of the candle is green or hollow (the same color as the background of the chart), then the candle is bullish. On the other hand, if the candle is red or full, then it is considered bearish.
In addition, two lines are usually attached to the candle - above and below, they are called shadows. They show the highest and lowest price for the time period.
Candlestick bars are also known as Japanese candles, due to their origin. They are the most popular type of charts among Forex traders, since candles form patterns that can be interpreted as market signals to buy or sell.
Forex for beginners - how to read a line chart?
A line chart is a simplified display of price movements compared to bars and a candle chart. The reason for this is that it only shows the closing prices of a certain period.
See also scalping brokers.
Forex for beginners - the pros and cons of each type of chart
Let's look at the pros and cons of the three main types of Forex charts.
- Pros - give the trader a good idea about the price movement and the presence of a trend;
- Cons - the complexity of conducting technical analysis for novice traders.
- Candlestick chart:
- Pros - a convenient and reliable idea of the price movement, since the candlestick chart not only shows all key levels for a certain period, but also allows you to more effectively identify market patterns and use technical analysis tools;
- Cons - sometimes it is difficult to assess the general trend of the market. Unlike bars, you depend on the color to determine if the candle is bullish or bearish.
- Line chart:
- Pros - its simplicity allows the trader to easily determine market trends;
- Cons - you can skip important information about the price movement, since the line chart shows only closing prices.
Trading Training - What are Bid and Ask Prices?
You may notice that there is a linear element on the chart that constantly moves and shows the current price. This line is called the price line, and it illustrates the current bid price of a currency pair.
In addition, it is important to clarify that at Forex you always have two types of prices: Bid and Ask. If you want to buy a currency pair, you will buy it at the Ask price. Conversely, if you want to sell a currency pair, you will need to use the Bid price.
You can display both price lines in MetaTrader 4 by right-clicking on the chart and selecting “Properties” (or just press F8). Then select the “General” tab, check the box “Show Ask line” and click “OK”.
The gap between the Ask and Bid lines represents the spread or commission that your broker charges for each transaction. This gap will vary depending on the currency pair and its liquidity.
See also what brokers with a minimum spread are.
Forex Training - time frame selection
There are different time periods that you can select on the Forex chart. In MetaTrader 4 you can find the following timeframes:
- Minutes: 1 minute (M1), 5 minutes (M5), 15 minutes (M15) and 30 minutes (M30);
- Sentries: 1 hour (H1) and 4 hours (H4);
- Daytime: D1;
- Weekly: W1;
- Monthly: MN.
To select or change the timeframe, click on the appropriate button located on the standard MT4 toolbar:
In addition, you can right-click on the chart and select the timeframe that you want to display:
Using charts with different timeframes can help you make a more reliable market analysis and get a complete picture of the overall trend in a particular currency pair. This can be useful before starting a trade.
For example, if your technical analysis on the H1 chart signals that you should place a buy order, but checking the daily chart, you see that the general trend of the currency pair is lateral, which means that the upward movement may be limited.
Trading from scratch - setting Forex charts
When reading Forex charts, it can be convenient to create your own chart templates, which will save you time and make the presentation of information more visual for perception. For example, you use a lot of technical indicators. So that you do not have to install them separately for each chart, you can save the template and then apply it to the rest of the charts.
To configure charts in MetaTrader 4, right-click on your chart and select “Properties”. The following window will appear in which you can configure various elements of the chart:
Here you can change the color scheme of the chart, the color of the background, bars, text and other elements of the chart.
To save the chart template in MetaTrader 4 with your settings, right-click on the chart and select “Template” - “Save Template”. Then give it a name and click Save.
To load a chart template with your settings on a new Forex chart, open the chart in MT4, then right-click on it and select “Template” - “Download Template”. Then select your template from the list.
See also cryptocurrency brokers.
Forex training is an important component of trading success. Without training in trading, no novice trader can become a professional. To do this, it is not necessary to complete professional courses, you can achieve everything yourself or with the help of our free manuals. Learning to trade from scratch is within the power of everyone, even those who are first facing the world of finance. We hope that this guide has helped you better understand how to read and configure Forex charts in MetaTrader 4. On our Forex portal you can find many useful and interesting articles for beginners and experienced traders. Happy trading!
See also the article "TOP 12 popular strategies in 2021".