The three different types of charts in FOREX Trading
Note: These forex charts are provided by all types of forex trading brokers both in Dubai, UAE and all over the world.
When trading FOREX, it is important that you have the basis in entering your trade so you would end up at the right position or what traders call as ride the trend. To a certain currency’s direction, you need to learn to read the charts. In FOREX trading, there three kinds of charts for you to choose from and this include the Line chart, the Bar chart, and the Candlestick chart.
The line chart is obviously a chart that draws a line from a certain currency’s closing price to the next closing price. We traders will be able to see the currency’s general price movement over a certain period of time through the lines especially if strung together with another line.
As compared to line charts provide by forex brokers, the bar charts are a little more complicated. With this type of chart, you will see the opening and closing prices as well as the highs and lows. The bottom part of the bar shows the lowest price while the highest price is shown on top of the vertical bar. Each bar on the chart indicates the currency’s trading range for the time being as a whole. On the bar itself you will see a horizontal hashes. The ones you see on the left side is the opening price while the ones on the right is the closing price.
One must note that each bar on the chart is a segment of time according to your platform’s time-frame. It can be 5-minutes, 15-minutes, 30-minutes, 30-minutes, 1-hour, 4-hours, daily, weekly, and monthly. Other than bar, this type of chart is also called as the “OHLC” charts. This is because this type of char indicates the Open, High, Low, and the Close of a certain currency pair.
To give you a summary:
- Open – is the horizontal hash on the left side of the bar.
- High – is the top part of the vertical line.
- Low – is the bottom part of the vertical line.
- Close – is the horizontal hash on the right side of the bar.
The candlestick chart works similar to the bar chart but appears prettier. Like the bar chart it also indicates the open, close, high, and low of a certain currency pair at a certain period. Unlike the bar chart, the candlestick has the larger vertical body. In a classic candlestick, the candle filled with colors shows that the currency closed at a lower price than its opening price. Today, forex traders have the options to fill the candlesticks with different colors. The most common colors used is the red and green wherein the green indicates a bullish price or closes higher than its opening price. The red colored candlestick on the other hand indicates a bearish price or closes lower than its opening price.
With the current colors used in the candlesticks charting, your trading platform now has attractive colors and easy to tell if the currency pair you are trading is at its bearish or bullish price range.