02 · Level 2What a chart shows, what the usual indicators are for, and how gold, indices and crypto CFDs differ from currency pairs. Fifteen lessons.
Reading the market: charts, tools and instruments
- 2.1
Charts and timeframes
One market looks like several different markets depending on the timeframe you open. Which one you trade decides what the rest of your plan has to be.
- 2.2
Candles: what one candle tells you
A candle holds four numbers — open, high, low, close — for one slice of time. Everything read off its shape comes from those four.
- 2.3
Trend, support and resistance
Where price has turned before is where traders watch next. The levels are not rules; they are places where orders tend to sit.
- 2.4
Indicators: MA, RSI, MACD, Bollinger
Each of the four is arithmetic on past prices, shown as a line. Knowing which arithmetic tells you what the indicator can and cannot react to.
- 2.5
Fibonacci levels
A tool that divides a move into fixed proportions. What it actually marks is where a lot of traders have placed the same lines.
- 2.6
Price action: trading without indicators
Reading the chart from structure — highs, lows, ranges and breaks — instead of from a calculated line.
- 2.7
Smart money: order blocks, FVG, liquidity
A vocabulary built on where large orders are assumed to sit. The terms are specific; the assumption behind all of them is the thing to understand.
- 2.8
Gold (XAU/USD): how it differs from currencies
Different contract size, different pip, wider ranges. The arithmetic of risk per trade changes with all three.
- 2.9
Crypto CFDs: bitcoin without a wallet
You trade the price, not the coin: no wallet, no transfer, but weekend hours, wider spreads and funding costs of their own.
- 2.10
Index and share CFDs
An index CFD moves with a basket, a share CFD with one company. Both carry hours, dividends and corporate events a currency pair does not.
- 2.11
Scalping: why costs decide the outcome
At a few pips per trade, the spread and commission are most of the result. The lesson is the arithmetic, before the technique.
- 2.12
Day trading
Positions opened and closed inside one session: no swap, but every decision made while the market is moving.
- 2.13
Swing and position trading
Holding for days or weeks moves the cost from spread to swap and the risk from one session to overnight gaps.
- 2.14
Sessions, news and the calendar
Which hours a pair actually moves in, and which scheduled releases widen spreads enough to matter to a stop.
- 2.15
A plan, a journal and a backtest
Three written artefacts: what you will do, what you did, and what the rule would have done before you used it.
Compare a reader who finishes this level with one who skips it
One reader opens a chart of EUR/USD at 1.0850 and sees a price. Another opens the same chart and sees a story: a candle that closed lower than it opened, a level that held three times last week, a moving average that price is testing. The first reader guesses. The second reader has a method. This level exists to move a person from the first position to the second, using nothing more than a free chart and the lessons listed on this page.
The gap is not intelligence. It is vocabulary and sequence. A beginner who jumps straight to indicators will plot five lines on a chart and still not know what the chart is telling them. A beginner who starts with timeframes and candles, then adds trend and levels, then adds indicators, builds a picture where each new tool answers a question the previous tool raised. The order matters more than the speed.
By the end of fifteen lessons, a reader can open any chart, identify the timeframe, read the last few candles, mark a support and resistance zone, and say out loud what would need to happen for their view to be wrong. That last sentence is the real test. It is the difference between a person who has opinions about price and a person who has a plan for price.
Build the chart before you add the tools
The first lessons are deliberately low-tech. A chart is a record of agreed prices over time. A timeframe is how much time each bar or candle covers. Change the timeframe and the same market looks calm on one and violent on another. Neither view is false. They answer different questions. A reader who understands this stops arguing about whether a market is trending and starts asking, on which timeframe.
Candles come next because they carry four prices in one shape: open, high, low, close. A long body means one side controlled the period. A long wick means price went somewhere and was rejected. Support and resistance are not lines drawn by an authority. They are areas where buyers or sellers previously appeared in size. The market remembers them because orders were left there, not because a rule says so.
Only after that do indicators make sense. A moving average smooths price and shows direction. RSI measures the speed of recent moves. MACD compares two averages. Bollinger Bands show how far price has stretched from its own average. Each one is a calculation on past prices. None of them knows the future. Used alone they mislead. Used to confirm what the candles and levels already suggest, they filter noise.
See why gold, crypto and indices behave differently
A currency pair like EUR/USD is a comparison of two economies. It moves on interest rate expectations, inflation data and central bank language. It is deep, liquid and usually slow. Gold (XAU/USD) is also quoted against the dollar but behaves more like a hedge. It can move sharply on fear, on real yields and on central bank buying. The same chart tools apply. The temperament does not.
Crypto CFDs give exposure to bitcoin without a wallet, a private key or an exchange account. The underlying market trades every day, including weekends, and can gap on news. Index and share CFDs track baskets or single companies. They have opening and closing hours, earnings dates and dividend adjustments. A reader who treats all four groups as one market will size positions wrongly and misread volatility.
This is also where costs become visible. Scalping, day trading, swing trading and position trading are not personalities. They are holding periods, and each one pays spread and commission a different number of times. A strategy that looks profitable on a chart can lose after costs. The final lessons on sessions, news, planning, journalling and backtesting tie the level together: a method is only real once it has been written down and tested on past data.
Doing it once, step by step
Work through the level in the order below, once, without skipping ahead. Each step builds on the one before it.
- 01
Open a demo chart
Use any free charting platform and load EUR/USD. Do not deposit money. The goal is familiarity, not profit. Set the chart to candlesticks and find the timeframe selector.
- 02
Switch timeframes on one market
Look at EUR/USD on a daily, a four-hour and a fifteen-minute chart. Note where the trend looks different. Write one sentence for each timeframe describing what you see. This trains you to ask which timeframe before asking which direction.
- 03
Mark one support and one resistance
On the daily chart, find a price area where EUR/USD turned at least twice. Draw a horizontal zone, not a thin line. Do the same for resistance above the current price. Keep the zones wide enough to be honest.
- 04
Add one indicator at a time
Add a 50-period moving average. Then add RSI. Then MACD. After each addition, ask what new information it gives that the candles did not. Remove any indicator you cannot justify in one sentence.
- 05
Compare gold and bitcoin charts
Open XAU/USD and a bitcoin CFD on the same timeframe. Note the size of the candles and the hours they trade. Write down two differences from EUR/USD. This is the comparison the level is built on.
- 06
Write a plan and backtest it
Choose one setup from the lessons, such as a bounce from support with RSI above 50. Write the entry, the stop and the target in plain words. Scroll back through the chart and count how it would have performed. Record every result in a journal, including the losers.
Questions that come up next
How long does level two honestly take to finish?
Fifteen lessons, each needing about forty minutes of reading and an hour on a demo chart. That is roughly thirty hours spread over four to six weeks if a reader studies most evenings. Rushing it in one weekend is possible and pointless, because the ideas only settle when they are used on live prices on several different days. The slow part is not reading, it is looking at charts until the shapes stop being noise.
Do I need to pay for a charting platform to follow these lessons?
No. Every lesson in this level can be done on a free demo account or a free charting site, and the EUR/USD price of around 1.0850 used in the examples is available on all of them. The tools described here, moving averages, RSI, MACD and Bollinger Bands, are standard and free. What costs money is trading live, and this level does not require that. A demo account removes the cost question while a reader learns to read a chart.
Why does the course start with candles instead of indicators?
Because an indicator is a calculation on prices, and a reader who cannot read a price cannot judge whether the calculation is useful. Candles show open, high, low and close in one shape, which is the raw material every indicator is built from. Starting with candles means later tools answer a question the reader already has. Starting with indicators means plotting lines with no way to tell a good signal from a bad one.
Can I trade gold or bitcoin CFDs after finishing this level?
A reader will understand how those instruments differ from currency pairs, which is not the same as being ready to trade them. Gold, index and crypto CFDs often move in larger steps and carry wider spreads, and the cost of a position can decide the outcome before the direction does. This level explains the differences so a reader can compare, not so they can jump in. Practice on a demo account first, and treat the difference in costs as the main lesson.
What is the most common mistake at this stage?
Adding more indicators when a chart feels confusing. Four tools that measure the same past prices do not add information, they add noise and delay a decision. The second common mistake is skipping the journal and the backtest in the final lessons, which are the only parts that show whether a method works over many trades rather than one. A reader who writes nothing down repeats the same error for months without noticing.
Does the CMA regulate the instruments in this level?
The CMA regulates firms offering these products in Kenya, and the rules a broker must follow vary between brokers and between instruments. This level does not list regulator requirements because they change and because they differ by firm. What a reader should take away is that a regulated firm and a demo account are separate questions, and both matter before any money moves. Check the current rules directly rather than relying on a course page.
The words used on this page
- timeframe
- The amount of time one candle or bar on a chart covers. A five-minute chart and a daily chart show the same market, but each answers a different question about it.
- support and resistance
- Areas on a chart where price previously stopped or turned. They are zones rather than exact lines, and they matter because orders were left there, not because of any rule.
- indicator
- A calculation on past prices, drawn as a line or band below or over the chart. It summarises what already happened and does not predict the next move.
- spread
- The gap between the price at which a position can be opened and the price at which it can be closed. It is a cost paid on every trade, and it varies between brokers and instruments.
- backtest
- Applying a set of rules to past price data to see how it would have behaved. It shows whether a method has any consistency, and it is not a promise about future results.
- demo account
- A practice account using live prices but no real money. It lets a reader make mistakes, record them and learn the platform without a financial cost.
What to take away
- A chart is a record of agreed prices, and the timeframe decides which story it tells.
- Candles and levels come before indicators, because indicators are built from prices.
- Gold, index and crypto CFDs differ from currency pairs mainly in cost and in step size.
- A method is only a method once it is written in a plan, tested on past data and recorded in a journal.