A price on a chart is the result of many people and machines agreeing, for a moment, on what something is worth. Understanding where that number comes from makes it much easier to understand why it moves, and why most moves cannot be predicted.
Buyers, sellers and the order book
Every market has buyers who want to pay as little as possible and sellers who want to receive as much as possible. The highest price any buyer is currently willing to pay is the bid. The lowest price any seller will accept is the ask. The gap between them is the spread.
A trade happens when one side gives in and accepts the other's price. If more people are eager to buy than to sell, buyers have to offer more to get filled, and the price rises. If sellers are in a hurry, it falls. All price movement comes from this, whatever story is told about it afterwards.
Spread and liquidity
- Liquidity is how easily something can be bought or sold without moving its price. Major currency pairs and the largest crypto assets are very liquid. A thinly traded asset can jump on a single large order.
- Spread is a cost. In traditional trading you pay it every time you open a position. On fixed-payout products the equivalent cost sits in the payout: a payout under 100% means a win pays you less than a loss costs you. The next lessons put numbers on that.
What moves prices
Prices react to new information about the future, and to changes in how many people want to hold something. The main drivers differ by market.
- Currency pairs respond to interest rates and central bank statements, inflation and employment reports, and growth data. A currency pair is always two economies compared, so the move is in the ratio, not in either one alone.
- Gold is often discussed as a store of value when people are worried about inflation or turmoil, and it tends to be sensitive to real interest rates and the US dollar. These are tendencies, not rules, and they break down regularly.
- Crypto assets trade around the clock and react to regulation news, exchange and network events, large holders moving funds, and general appetite for risk. They are usually more volatile than currencies or gold.
Scheduled events and surprises
Some information arrives on a calendar: central bank decisions, inflation figures, monthly employment data. Prices often move sharply in the minutes around them, and spreads can widen. Other information arrives without warning. In both cases the price moves on the difference between what happened and what was expected. A strong report that was fully expected can move nothing, and a modest one can move a lot.
Note: By the time you read a headline, the price has usually moved already. Trading the headline is trading the part that is over.
Trading sessions
Currency markets follow the sun: Sydney, Tokyo, London and New York open in turn. Activity is typically highest when London and New York overlap, and quietest in the hours between the New York close and the Tokyo open. Crypto has no closing time, but it too has busier and quieter hours.
What this means for you: the same chart pattern behaves differently in a quiet hour and in a busy one. A strategy tested only in busy hours may not survive the quiet ones, and the reverse.
Why prices look random
New information is, by definition, not known in advance. So the part of a price move that comes from news cannot be forecast, and it is often most of the move. Over short horizons, such as the seconds and minutes of a fast expiry, there is also a great deal of plain noise from many small orders. This is why a price can look like it is "going somewhere" and then reverse for no visible reason.
That does not mean charts are useless. It means:
- Analysis can shift odds a little, not remove uncertainty.
- The shorter the horizon, the smaller any edge is likely to be, and the more the payout structure dominates the result.
- You should plan for being wrong often, and size your trades so that being wrong is survivable.
Reading the data label
On this platform every market shows whether its figures are live, delayed or sample data. Use it. Delayed data is fine for learning how charts look, but a delayed price is a price from the past, and a decision based on it is not a decision about now. Sample data is for practice only.
Check yourself
- Explain the difference between bid and ask in one sentence.
- Name one scheduled event that moves currencies and one that could move crypto.
- Why can a good news report push a price down?
If you can answer all three, you are ready to read a chart.
