Forex trading charts are indeed one of the most essential tools for any serious Forex trader. These charts are the foundation of the foreign exchange (Forex) technical analysis, forming trading systems that are based on taking time to study the price movements instead of economic predictions. These days, a large number of traders prefer technical analysis which doesn’t require any type of education in economics or specific knowledge.
Before starting to invest in the Forex market, it is important to learn first the Forex trading. You will learn some practices and the basic things to do prior to investment.
All Forex trading charts will display the price movements. Generally, traders can easily track price movements over a (variable) amount of time – this means that you can view the last couple of minutes, hours, days or even longer. Utilizing Forex trading charts in combination with top Forex trading strategies will enable you to easily identify emerging trends that can indicate a worthwhile trading opportunity.
Forex Trading Charts are available in 3 Formats:
a. The Line Charts
Line charts are programmed to plot closing prices when the trading period comes to an end, which could be one minute to a whole day. These are connected with a line in order to illustrate the direction of movement(s). But line charts do not inform you about the happenings that took place at different times at some point within the time period; you only get to know the final closing price.
b. Bar Charts
This is one of the well-known Forex trading charts. Bar charts provide traders with 4 prices for every period:
- Opening Price
- Low Price
- High Price
- Closing Price
The advantage of bar charts over line charts is that they show you just how wide fluctuation were at the time, providing you with a pretty good idea at a single glance, the volatility of the currency pair. Many traders include bar charts in the toolbox of their Forex trading strategies.
c. Candlestick Charts
Candlestick charts provide the same type of info as the bar charts, but the only difference is that candlestick format is colored – many traders find it easier to read this chart format. Once more, a vertical line will mark the low and high prices during a period; however, a wider block runs between the closing and opening price. The block is filled with color; typically, red if the price is falling and blue orgreen if the price is rising. But if the chart is displayed in black and white, the trader will see white indicating a rise in the price and black for a fall in price.
The colors provide you with an instantaneous view of whether or not the prices fell or increased during the period. That is why candlestick charts are faster to read at a single glance than the bar charts; a lot of traders prefer to use candlestick charts as their Forex trading charts.
Being able to tell the movements of prices is one of the Forex trading strategies that you need in order to succeed as a Forex trader. With the right Forex trading strategies, you will be able to minimize your risk and improve your chances of increasing your capital.
There are a lot of good Forex trading strategies online; check ‘em out!