To be successful in the foreign currency exchange market, it is important for forex traders to be well-familiar with the different types of forex trading charts. Each type of chart provides different information related to the forex market. These charts such as Fibonacci retracement (http://www.marketsurvival.net/the-advanced-guide-to-fibonacci-trading/) can tell traders, at a glance, the market trends and price movements at any given time. Charts make it easier for the investors and traders to analyze the market behaviour without reading lengthy market analysis reports.
Charts are very important not only in the forex market but also in any other trading market as well, like stocks. These are useful tools for traders and investors in analyzing data for better judgement on where to invest their money. It is, therefore, imperative to know the different types of forex trading charts and their corresponding benefits when planning to venture and invest in the foreign currency exchange trade.
The Bar Chart
Useful Forex Trading Charts For Technical Analysis
The bar chart is one of the popular types of charts in forex trading. This chart shows the different prices of various currencies usually at 4 different times of the day. The bar chart tells traders the opening prices, the highest and lowest prices, and finally the closing prices of different foreign currency units. By simply looking at the chart, investors are informed of the volatility of the market and the extent of fluctuations within the day.
Moreover, traders will also be able to easily identify the price trend of different currencies, whether it is appreciating or depreciating. The fluctuations can further help investors in identifying currencies that are highly volatile to external and internal factors, including those that are more stable despite the present local and global economic and political issues.
The Candlestick Chart
Another type of chart that is very useful for traders is the candlestick chart. This is more like the bar chart in terms of providing the kind of information to the traders, except that the data is better presented with different colors for ease of comprehension and more enhanced analysis of the market behaviour.
Specific information is assigned with a certain color. For instance, red color indicates a falling market price, while the blue or green color indicates an increasing price. By simply looking at the red marks, traders can easily identify depreciating currencies. On the other hand, they can also determine the gainers for the day. The candlestick chart is an enhanced version of the bar chart, thereby making this type of forex trading chart more popular among investors and forex traders.
The Line Chart
The forex line chart is another type that is used because of the straightforward information that this chart provides. Line charts show the prices of units at certain intervals of time, like every hour, day, week or month. This is very effective in finding the direction of the price of a particular currency within the day, week, month or year and is frequently used to make buying or selling forecasts.
All of these charts are the partners of most traders and investors in planning and strategizing their every move. Together with other tools that help analyze and forecast the market’s price movements, charts play an important role in a trader’s success.