Price action refers to the change in the value of a currency pair over a period of time. The currencies within a currency pair are constantly shifting in value in relation to each other as traders, investors, banks and other market participants buy and sell them. These fluctuations are charted over a specific time period to create a chart of the price action.
Price action is at the heart of active forex trading. By creating charts of price action, currency traders are able to apply technical analysis to those charts and create trading strategies and systems. Although every trader can look at the same data charted over the same time periods, each trader has a different interpretation of what the price action is signaling. Currency pairs vary in how much price action they see in a trading day. Some currencies have volatile and extreme swings, whereas others stay within relatively narrow ranges of price. In either case, however, traders can identify the same chart patterns and trading signals, although the scale of those signals (the level of price action) is very different.
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