Fundamental tools

In the world of forex trading, there are a number of charts and tools available to help you make sense of the market. There is a common question that comes to us dose it works really? is there a specific formula? Well, in short... no. The answer is 'it depends'. It all comes down to personal preference and what information you wish to glean from a chart. While one trader might love lagging indicators in terms of forex analysis, another may insist on using price action alone when trading the market.

In this article we look at some of the most widely used tools in forex trading and how you can incorporate them into your daily routine to make better decisions with respect to the market.

What's the best type of chart for your trading?

When it comes down to choosing a type of chart, most traders will already have a personal preference according to what they are accustomed to using in the markets. While there is nothing wrong with this, most traders would benefit from switching up their charting techniques every now and then. For example, you might be familiar with the candlestick charting method used in forex trading but it's also worth looking at what other traders are using to get an idea of how you can incorporate these kinds of tools into your own strategy.

Keeping trading simple with line charts and bar charts

While there are a number of different charting tools that can be used when trading the forex markets, one of the simplest ones to use is a line or bar chart. These charts simply show you how price has moved up and down over a given period of time and have been around since the early days of stock market trading. There are many peoples in the forex market who is understanding these types of charts in forex and they know how to read them. For those who have never used a line or bar chart before, it's important to know that the higher the line is on the chart, the more the market has moved as a result of bullish pressure.

Line charts and bar charts for your trading

Using line and bar charts when trading the market is very simple. For example, if you decide to use a 5-minute chart when trading forex, this means that you will be given information every five minutes on how the market has moved over that time period. The price markers are used to indicate where the highest and lowest prices were within this timeframe and the lines or bars on the chart indicate whether this was a period of buying pressure, selling pressure or little activity. For those traders who enjoy using these charts when trading online, you'll find them very easy to read and understand as they give you an accurate representation of how the market has moved over an extended period of time.