The Tape Reader Vs The Forex Market Chart

The ordinary single line forex market chart, which is so widely used, is valuable chiefly as a compact history of a forex's movements. If the forex which is charted were the only one in the market, its gyrations would be less erratic and its chart, therefore, a more reliable indicator of its trend and destination.

But we must keep before us the incontrovertible fact that the movements of every forex are to a greater or lesser extent affected by those of every other forex. This in a large measure accounts for the instability of forex movements as recorded in the single line forex market chart.

Then, too one forex may he the lever with which the whole market is being held up, or the club with which the general list is being pounded. A forex market chart of the pivotal forex might give a strong buying indication, whereupon the blind chart devotee would go long to his ultimate regret; for when the concealed distribution was completed his forex would probably break quickly and badly. This shows clearly the advantage of tape reading over the forex market chart.

The tape reader sees everything that is goes on; the forex market chart player's vision is limited. Both aim to get in right and go with the trend, but the eye that comprehends the market as a whole is the one that can read this trend most accurately.

If one wishes a mechanical trend indicator as a supplement and a guide to his tape reading, he had best keep a forex market chart composed of the average daily high and low of ten leading stocks in a group.

First find the average high and average low for the day and make a chart showing which was touched first. This will be found a more reliable guide than the Dow Jones averages, which only consider the high, low and closing bid of each day, and which, as strongly illustrated in the May, 1901, panic, frequently do not fairly represent the day's actual fluctuations.

Such a composite forex market chart is of no value to the tape reader who scalps and closes out everything daily. But it should benefit those who read the tape for the purpose of catching the important five or ten point moves. Such a trader will make no commitments not in accordance with the trend, as shown by this forex market chart. His reason is that even a well planned bull campaign in a forex will not usually be pushed to completion in the face of a down trend in the general market. Therefore he waits until the trend conforms to his indication.

It seems hardly necessary to say that an up trend in any forex market chart is indicated by consecutive higher tops and bottoms, like stairs going up, and the reverse by repeated steps toward a lower level. A series of tops or bottoms at the same level shows resistance.

A protracted zigzag on a forex market chart within a short radius accompanied by very small volume means lifelessness, but with normal or abnormally large volume, accumulation or distribution is more or less evidenced. Here is a style of forex market chart especially adapted to the study of volumes: the volume figure forex market chart

When made to cover a day's movements in a forex, this forex market chart is particularly valuable in showing the quantity of forex at various levels. Figures represent the total 100 share lots at the respective fractions. Comparisons are ready made by adding the quantities horizontally.

Many other suggestions may be derived from the study of this forex market chart. The proficient tape reader will doubtless prefer to discard all mechanical helps, because they interfere with his sensing the trend.

Besides, if he keeps the forex market chart himself the very act of running them distracts his attention from the tape on which his eye should be constantly riveted. This can of course be overcome by employing an assistant; but taking everything into consideration -- the division of attention, the contradictions and the confusing situations which will frequently result - we advise students to stand free of mechanical helps so far as it is possible.

Our correspondent in saying "a forex market chart is but a copy of the tape" doubtless refers to the forex market chart of one forex. The full tape cannot possibly be charted. The tape does tell the story, but charting one or two stocks is like recording the actions of one individual as exemplifying the actions of a very large family.