Your First Chart Read

You’ve done it: you know what a market is, which price you get, how to read a candle, which way a chart is going, where its floors and ceilings are, and how to zoom out. Now let’s use all of it at once, on one chart.

New words in this class: none! Just a new habit.

Three questions, every time

Whenever you look at a chart, ask these three questions, in this order:

1. Which way is it going? Up, down or sideways? Zoom out first (class 7), then look at the peaks and dips (class 5).
2. Where is the nearest floor and ceiling? Find the prices where it last turned (class 6).
3. Who won the last candle? Buyers, sellers or a tie? Read its body and wicks (class 4).

Then say it in one sentence. For the chart above: “It’s going up, the nearest floor is where the last dip stopped, and buyers won the last candle.”

That sentence is a chart read. It doesn’t tell you what will happen next, and nobody can, but it tells you exactly where you are. Every good trading decision starts from there.

Make it a habit

Here is a little routine to practise this week:

• Play a round of Practice rounds: ten real charts, and a score to beat.
• Open any free chart: a currency pair, a stock you know, gold.
• Ask the three questions and write your one sentence.
• Do it again tomorrow on the same chart. Did the floor hold? Did the trend continue?

Five minutes a day is enough. You’ll be amazed how quickly charts start to look familiar.

Where next?

Congratulations: you’ve finished First Steps! Next on your path is Market Basics, which shows how the stock and forex markets work in more detail, then Forex Essentials and Risk and Money Management. Together, those three are what the book assumes you know.

Remember

• Three questions: which way, where’s the floor and ceiling, who won the last candle.
• Say it in one sentence. That is a chart read.
• A read tells you where you are, not what happens next.