How Important are Forex Charts for Trading?
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How Important are Forex Charts for Trading?

How Important are Forex Charts for Trading?

For either stock exchange or currency exchange in the market, technical analysis plays a vital role for all investors as technical analysis is a method used to evaluate and predict the market movement by gathering statistical information from the trading market itself. For the sole above reason, we can say this is why the Forex chart is very important in terms of Forex trading. 100% Forex Free Trading Signals

Brief introduction of Forex Charts

First of all, for a brief introduction, there are 3 main types of charts: bar charts, candlestick charts, and point & figure charts. Actually, the first charting analysis technique originated from Japan over 300 years ago, and not the west as many people thought it might be.

Uses in forex trading and the stock exchange

One of the most common and widely used charts in Forex trading and the stock exchange is none other than the bar chart. As the same suggested, a bar chart uses the bar as their graphing for the chart, and in addition to that, normally a bar chart is used to display the high, low, open, and closed for each particular day, which makes it an advantage compared to the other two types of charts. Forex Free Trading Signals

Candlestick chart

Another one of the commonly used chart types is the candlestick chart. The candlestick chart is commonly referred to as "Japanese Candles" as the Japanese often used this chart type to analyze the price for the rice contracts. Regardless, this chart performs almost the same function as the bar chart where it displays high, low, open, and closed. However, the candlestick chart differs from bar charts because candlestick charts use different colors (such as blue and red) to display the condition of certain currencies. For most investors, the candlestick chart can be said as a "love or leave" situation because the investor will either use the chart frequently or wouldn't use it at all.

Point and figure charts

Last but not least, the 3rd type of chart is the chart known as point and figure charts. Actually, to tell the truth, this chart is seldom offered in most of the online Forex chart resources as it is very tedious to keep a long record of the trading which occurred throughout the whole period. This is because initially, point and figure charts were used for intraday charting only. This chart plots a day to increase or decrease of a certain currency with "x" for the increase and "o" for the decrease. Thus, this graph helps the investor filter out fewer active trades and helps them focus their investment on more active trades.

Conclusion

In truth, charting is very important for technical analysis as it shows the result of the data collected from daily Forex trading. With the aid of charts, the Forex market flow can be predicted easier and more accurately. Try to consider this where if there is no chart or any graph to show the performance of the market, how can analysis be done by just looking at a chunk of raw data, which obviously means nothing if it is not analyzed? Forex Free Trading Signals

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