If you want to succeed in Forex trading, you need to learn the characteristics of the different trading charts that are available to you. Trading charts in Forex are extremely useful, as they help you see the movement of the market and make the identification of the trends a much easier process. Moreover, through the trading charts in Forex, you will be able to spot the opportunities that will lead you to profitable deals.
You can find many different types of Forex trading charts, even though the most popular ones are the tick, line, bar, and candlestick charts. In this article, we are going to take a look at what these charts are showing and how you can read them.
- Tick Chart
Firstly, one of the most popular trading charts in Forex is the tick chart. This particular chart is different from the rest of the time-based charts because it uses trades as its measure. This means that a new bar will appear after a specific number of trades is completed. Furthermore, the tick chart is configurable, and so you can set the number of trades that you find the best for the Forex pair you are inspecting. For example, in one case you might find that you gain the most insight after 200 trades, while in another pair after 350 trades.
- Line Chart
The line chart is the simplest chart you can create and the easiest one for you to understand. It consists of just a simple line that follows the closing prices of an exchange rate on a daily basis. In reality, this is a trading chart that is not widely used in Forex because it doesn’t offer any specifics. However, some traders still utilize it to get a quick glimpse of the market’s movement. If you are interested in getting the big picture, without needing to dig a little deeper, then this chart offers an easy way of doing so.
- Bar Chart
A bar chart is also an easy to follow chart, just like the line chart but it includes more information than that. Every bar is a vertical line that shows both the closing and the opening price of an exchange rate. Additionally, you can use a bar chart to inspect a specific period of time. For example, if you create a 1-hour bar chart, every bar will represent 1 hour. This way, you will know the opening and the closing price of the hour. This is very helpful when you want to take notice of the fluctuations of an exchange rate.
- Candlestick Chart
Out of all the trading charts in Forex, the most popular is the candlestick chart. In essence, this chart contains the same information as the bar chart, but in a more attractive and easy to read way. The bars of the above chart are replaced by candle-shaped bars, that still represent the high and low price of a specified period. However, in this chart color is also used to help you understand the fluctuations at a single glance. If, for example, you are using a green and red candlestick chart, then if the opening price is higher than the closing price the candle will be green. In the opposite case, the candle will be colored red.
Now that you know how to read the most popular trading charts in Forex, head to GetForexOnline.com to get the latest insight and start gaining profit.