In Forex, a chart is a representation of the bid and ask price movements of currency pairings in lines, columns, or any other format. Price changes can be described in a variety of time durations, including minutes, hours, days, months, and even years. Charts are made up of two lines that represent time and price: the x-axis represents time and the y-axis represents price. In Forex, the most used charts are line, bar, and candlestick. Candlestick charts are commonly used by traders due to their complexity. They signify the beginning/end of a period as well as the highest/lowest pricing. However, the majority of Forex brokers include these charts in their platform, and users can see them after subscribing for a demo or live account.
In this article we’ll know more about all the charts used in forex trading and how do we, the traders, analyze them.
Types of charts in Forex
There is hardly any broker who doesn’t provide chart features in their trading platform. Besides, when a trader downloads an MT4, MT5 or cTrader trading platform, the charts automatically get incorporated. To get it for free and in a web version, a trader may browse to trading view, a third-party charting program. The three most popular charts are Line charts, Bar charts, Candlestick charts.
The line chart is the most basic and simplest price representation in forex. In general, it draws a graph with several pricing points for a specific pair and connects the spots with a continuous line. A line graph is so easy to understand that one can easily get information about it and this is because a line graph only depicts the closing price of currency pairs. Traders who want more information, such as the opening price or the highest/lowest prices, can’t gather it from a line chart.
The bar chart is totally different from the aforementioned chart, the line chart. Bar chart is more complex and offers more information than the line chart. To be exact, a bar chart represents four different prices of a currency pair in a given time period. It could be either minutes, hours, days or even higher.
The top and bottom ends of the bar represent the highest and lowest prices of the asset in a certain time period; the opening price is shown on the left, and the closing price is shown on the right. The bar chart depicts four separate prices, whereas the line chart only represents one. While the line chart represents one price, the bar chart does that for four different prices. But when it comes to the most complex chart type, even the bars aren’t enough.
Candlestick, the most popular chart in the forex market to represent price movement at a specific time. The candlestick chart is a combination of a line chart and a bar chart. The candlestick chart shows four prices in a longer time frame, whereas the bar chart only shows four prices in one time period and the line chart only shows one price in a longer time frame. In a summary, the individual bars are organized in a time period and represent the opening/closing, high/low, and high/low prices of a currency pair.
It can be scary to look at forex trading charts for the first time. Understanding the price and time axes, on the other hand, can help you figure out what has happened in the past, which can help you predict what will happen next. Traders can better identify risks by understanding the exchange rate and how to calculate pips, especially when using the Admiral Markets trading calculator. Each of the three chart types has its own set of characteristics, with candlestick charts being the most popular among traders worldwide.
Each of the three chart types has its own set of characteristics, with candlestick charts being the most popular among traders worldwide. Identifying patterns from candlestick charts, such as a bearish harami or a bullish explosion, can help traders in identifying prospective turning phases and market movements