Forex

In Forex, the idea is to buy a currency that is going up in price, and pay for it with a currency going down in value. The one going up is strong, and the one going down is weak.
When we look at a standard Forex chart ,we are seeing the difference between the value of 2 different currencies. If the line moves up or down, it is representing the difference in price between those two currencies. Forex charts are also called spread charts.

Observing one pair is great for beginners, but once you turn professional, it would be irresponsible not to take into account all the major currencies. You need to know what’s going on with other currencies since they have a major influence on all trades. Using the EURUSD as an example, when the line goes up it appears that the Euro is getting stronger and US dollar is getting weaker.

How do we know for sure? There are other currencies that may be causing the apparent strength or weakness we see. What’s happening when we put the Euro up against the Loonie or Peso or Pound? How is the US dollar doing against the Yen or the Pound? Looking at one chart is only seeing part of the picture. Once you realize how vital it is to measure strength or weakness outside of one particular chart, the market will begin to make sense.

In my next letter, I will show how to figure out the strength of an individual currency manually. The Grail system does it automatically for time periods up to sixteen hours, but it’s nice to know how it does its magic. To keep you on track, figure it this way.