The vertical scale on the forex trader is a graph that displays the price movement of a currency pair over a certain period of time. It is one of the most important features of a forex chart and is used by traders to analyze market trends, identify support and resistance levels, and make trading decisions.
The vertical scale on a forex trader is usually located on the right-hand side of the chart and is measured in pips or points. A pip is the smallest unit of price movement in a currency pair and is equivalent to 0.0001 or 1/100th of a percent. For example, the difference between the bid and ask price of EUR/USD may be 1.2345/1.2346, which means that the spread is 1 pip.
The vertical scale on a forex trader is divided into equal intervals, with each interval representing a certain number of pips. The number of pips displayed on the vertical scale depends on the time frame of the chart. For example, a 1-hour chart may have a vertical scale that displays 50 pips, while a 4-hour chart may have a vertical scale that displays 200 pips.
The vertical scale on a forex trader allows traders to identify support and resistance levels, which are key areas of price where buyers and sellers are likely to enter or exit the market. Support levels are areas where price has previously bounced off and is likely to do so again, while resistance levels are areas where price has previously been rejected and is likely to do so again.
Traders can also use the vertical scale to identify trends in the market. An uptrend is characterized by higher highs and higher lows, while a downtrend is characterized by lower highs and lower lows. By identifying the trend, traders can enter trades in the direction of the trend, which increases the probability of success.
The vertical scale on a forex trader is also used to identify key levels of price action such as pivot points, which are areas where price is likely to reverse. Pivot points are calculated based on the previous day’s high, low, and close and are used by traders to identify potential entry and exit points.
Traders can also use the vertical scale to identify patterns in the market such as head and shoulders, double tops, and double bottoms. These patterns are formed by price action and are used by traders to predict future price movements.
In conclusion, the vertical scale on a forex trader is a vital tool that traders use to analyze market trends, identify support and resistance levels, and make trading decisions. By understanding how to use the vertical scale, traders can increase their chances of success in the forex market.
