Simplifying Forex Trading Graphs

Looking on the net at comments about forex trading, one wonders how people expect to make money without having a basic grasp of the principles involved in trading. People tend to rush in, with promises of easy money, but they then discover that it’s a lot harder than it looks. This article seeks to identify a basic principle that leads to the creation of a successful trading model, it is based on the idea of correlation.

Correlation exists where there exists a mutual relationship of interdependence between two entities. Why is it that people feel so sure that they are able to earn money in forex? Surely the reason is that they immediately see that there are patterns, that is, correlation.

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I would suggest that the reason why the majority lose money in currency trading is that even if there is correlation in the graphs, yet people fail to realize that the character of the correlation is very complicated. There isn’t only a bond of interdependence between the price and the line on the graph above.

I would suggest that the reason why the majority lose money in currency trading is that even if there is correlation in the graphs, yet people fail to realize that the character of the correlation is very complicated. There isn’t only a bond of interdependence between the price and the line on the graph above.

We can see that there would be correlation between these two graphs. Although the price does not move directly proportional to the stochastic graph, yet the former generally turns at similar times to the latter. The result is the fact that we have another tool to help our understanding of the way in which the price moves.

Price changes refer to trends in pricing that usually repeat over time, and when graphed on a chart, can easily reveal reappearing patterns that can help you make decisions. Another popular area for creating chart techniques are historical trends. This is usually charting the relationship between time and prices. This can be charted across a number of different ways, and are generally labeled in five major categories: waves, number theory, gaps, trends, and indicators.

I would suggest that it’s the nature of currency trading; it involves the accumulation of indicators that correlate with the price and as a result contribute to creating a successful trading method.

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