Forex Charts – Understanding the Different Types of Charts in the Currency Market
Member since: 12/02/2011
We are aware by now that investors out there can trade using price charts and others do so via economic and political concepts of varying regions around the globe. The former achieve this via technical analysis technique and the latter do so using a method fondly called fundamental analysis. I presume by this time that it’s no more stories that over 90% of forex traders are technical traders. They simply say that it is wise to trade on what is visibly seen on the charts rather that rumor (financial news) that can either be true or false. Hence it is clearer trading via technical analysis methods.
It is imperative at this point that we are able to combine technical and fundamental analysis when we trade, as this is the best trading blend. Trading solely on triggers from technical analysis can lead to huge losses. Technical traders are aware of the fact that price charts are the most important aspect of technical analysis; this makes it imperative to all technical traders to learn and master the different types of charts.
There are several types of price charts in the currency market and I think some of them are of no use to technical traders; no one actually use them for trade activities. I’ll take some time in explaining the very useful cart types:
Line Chart: A line chart employs the use of a line in showing price changes. The line chart is plotted according to a special time frame. They simply show the closing price of every period. You can set the line chart to show the closing price at the end of each minute, each day or even periods between. The line chart is shown to have its points joined by the way of lines showing price movements. Based on defaults the line chart are plotted to show close price unless you change it. Traders use the line chart to get a quick overview of the market trend, but they offer little information to investors that they could base their trading plan on.
Bar Chart: The Americans use the Bar chart as their own version of the candlesticks (a chart pattern invented by the Japanese). It is said that the Americans came up with this invention without knowing about the Japanese candlestick chart patterns. The bar chart provides four times more the information gotten on the line chart. In addition to the closing price the bar chart also reveals the opening price, as well as high and low for that period.
Candlestick charts: The candle stick chart patterns are definitely the most popular and most used forex chart out there. They give traders a lot of information about the market. The reveal the high and low price for the period just like the bar charts, but the high and low of the period are shown in a range pattern on the candle body. On the body of the candlestick an open that’s higher than the close for the period is a sell candlestick and is filled white as a default setting on the MT4. When the close is higher than the open price for a period, it shows a bullish candlestick that’s represented by an unfilled candlestick by default on the MT4 chart. Although, different charts could shoe varying color fills for the candlestick, it is wise you check before continuing on using a chart so you don’t them mixed up. Whatever the chart pattern you decide to use, you can always alter the timeframe for any of the chart patterns discussed here. Thus helping you analyze price movement on different periods. Experience has taught me to always cross check signals on different timeframes for confirmation.
Member since: 08/02/2011
I dont think nowadys anyone using other charts rather than candlestick chart what you says guys.
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