Forex trading charts are tools that you can use to analyze movements in the currency market. There are various kinds of charts used in currency trading such as line, bar and candlestick charts.
There are different types of forex trading charts that are used in the currency market. These charts are tools that help a trader analyze the market in order to make appropriate trading decisions. Below are some of these very helpful charts. Line ChartAs the name implies, it involves drawing a line starting from a particular closing price toward the subsequent closing price. This way, prices are strung or arranged in a line that will depict the general movement of a certain currency pair over a time period. Bar ChartCompared with the line chart, this one is a bit more complex. Not only does it show the opening/closing prices, it also presents the highs and the lows in the market. Thus, a bar chart may also be called as OHLC or Open, High Low and Close. A vertical bar is the representation of the entire trading range of a currency pair. There is also a horizontal hash that you can see in this chart. This hash found on the bar's left side denotes the opening price of the currency; while the hash on the right side is the pair's closing price. The bottom part of a vertical bar is an indication of the lowest price by which a currency is traded on that specific time period. The top part, on the other hand, is the highest price by which trading is done. Keep in mind that one bar implies only one time segment such as a day, a week or even an hour. Each time that a bar is seen forward, it is important to know to which time frame it references. Candlestick ChartThe information revealed by this chart is the same as the information shown in a bar chart. The difference mainly lies in the aesthetic quality of how data are presented. Conversely, a candlestick chart presents the data in a graphic and more appealing fashion. The candlestick bars also indicate high-low ranges through vertical lines. In this charting method, the body or the larger block found in the middle is an indication of the range in between opening/closing prices. Usually, when the block is filled with shade or color, it means that the currency is closed at a price lower that how it opened. The candlestick charts serves as an engaging visual aid, particularly because same details are also found on bar charts. Yet, candlestick charting offers some distinctive advantages. One is that it is ideal for beginners to use when beginning to understand analysis of charts; since they are easier to interpret. The ease of use offered by candlestick bars also allows your eyes to easily adapt on looking at them. Due to the visual appeal of these charts, learning chart analysis becomes easier to grasp. The bars also have cool names that depict the pattern they display; making them easier to remember. Turning points in the market are also easier to identify with the use of candlesticks. Turning points are the reverse movement from a downtrend going to uptrend or vice versa.