Understanding the basic charts

Posted on Posted in Fx School

Types of basic forex chartsĀ 

We are going to show you the different types of forex chart here. In forex, these three charts are most popularly used by traders all around the world. They are pretty simple to understand and give a very clear signal of the live market condition.

These three types of chart are
1. Line chart
2. Bar chart
3.Candlestick chart

1. Line chart

It is the simplest form of the forex chart. In the line chart, simply draw a line from one closing point to the another closing point. When you draw the lines together, you will find the price level movement of a currency pair for a period of time. Here is an example of Line chart.


Figure: Line Chart

2. Bar Chart

It is little advance than the line chart. Here is an example of the bar chart.

Figure: Bar Chart

Forex bar chart not only shows the closing price, it also shows the opening price of a currency pair. It also shows the high and lows. That is, the lowest price paid for that trade and the highest price paid in that time frame. It is also known as OHLC chart. Because it shows the opening (O) and high (H) and lowest (L) and closing (C).

Figure: OHLC chart

3. Candlestick chart and Japanese candlestick

It is the prettiest chart of forex. It is visually pleasing and provides much information at once. If you are a newbie, you will find it very useful.

Here is an example of Candlestick chart


Figure: Candlestick chart

You might be wondering why there are two colored bodies in the candlestick chart. Herse your answer.
If the price closed lower than it opened, it is red.
If the price closed higher than it opened, it is white.
In one word, remember like this, If the price is higher than it open, it is white and if it is lower it is black.
Candlestick serves the same purpose of the bar chart. The only difference of this chart is, it is visually pleasing. You can interpret the signal from the basic forex charts and trade the live condition of the market by looking at the candle. It is very useful for interpreting signal with less stress.
Here is an example of candlestick chart you would see in the market of forex trading.


Figure: Candlestick chart

Here, green means the white and red means the black. It is only a colorful version of the candlestick chart. You will find these colorful versions on your chart display as it is visually pleasing.

Conclusion

Understanding the basic forex charts is important to know the market condition of the currency pair and also to know the price level of the currency. As all information are presented in the chart, it is wise to use the candlestick chart. Even if you are a newbie, we would advise you to use the candlestick chart. It is very easy to understand and will help you to know the live signal of the Forex market.