Charting refers the use of historical data points such as price and volume to create a graphical representation of currency pair in hopes of identifying patterns and formations that will help to predict future price movements. Or, put simply, charting is the practice of using charts to decide when and where to place a trade. Charting can simply be a trader recording price action over a period of time, or it can be more complex with the trader using mathematical equations to extrapolate the price data to create new charts.
Charting and technical analysis go hand-in-hand in the forex market. A trader will create and follow various charts for indicators that he should take up a position. Once an indicator appears, the trader will implement his system to make the trade. Most traders use forex trading software or technical analysis software to generate and monitor charts. In some cases, traders may automate the whole system, including entering and exiting the trade.
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