If you are a Forex trader, you need to be updated about the price fluctuations. The way a trader can know the value in detail is called a chart. It is a visual image of value changing for a specific period. It shows the trading activity during the time frame. It can be for 10 minutes, 1 hour, 4 hours, 1 day or 1 week. Since charting is a random event, one should not depend on that. You must follow your strategy and techniques to get success.
The chart is working as a helping hand. It has become relatively easy to identify the currency pairs patterns, movements, and tendencies from a graph. It represents the demand and supply scenery. Here are 3 different types of Forex charts.
- Line chart
- Bar chart
- Candlestick chart
It draws the image of currency rate from one closing point to another closing point. The gap between the points is called as the time frame. The price movement during a particular period will be visible through a line chart. Though it is simple to understand, the line is not enough to provide information to its customers. You will only be able to know the closing point of value. The rest of the essential facts will be unknown to you.
But this is the most used thing because day traders and scalper are very fond of this. They can observe the live-action through this one. A big-screen view is quite helpful for many traders. It is the best way to view trends. This type is famous for its simplicity.
A Bar typically has four tools that are used to get accurate information of price movement. Open, close, high, low; four are the ingredients of this one. It is a little bit complicated than the previous one. Where one bar has ended, the next one starts from there. When the price starts to get high, the seller receives priority, and when it goes down, the buyer usually gets the chance to buy currency.
If the lower price movement shows the high mark longer than the low mark, it means the buyer got the opportunity. While increasing the value if the low mark looks more extended than the high mark, the seller has reigned at that moment. But this is not ended yet. Here is just a visual image that shows us the market condition of the currency. It might happen that at the same point, buyers and sellers both are equally active. The bar shows us the actual graph of ongoing value during a limited time.
Candlestick chart is a variable form of the bar chart and it is widely used in the ETF investment industry. Most of the traders like it because it is easy to read and understand. It still indicates the vertical line with a high-low range. Candlestick visualizes the bullish and bearish with a color format over display during a time. The upper area of the filled color is the opening price, and the lower part is the closing value. If the closing value gets higher than the opening value, the filled color area will be unfilled or white. Some advantages of the candlestick:
- Suitable position for beginners
- Easy to use
- It has cool names like shooting stars which help us to remember the exact pattern.
- Excellent records at identifying the market situation and turning point
With the help of technical analysis, one can research more correctly which chart is suitable for them. The most crucial fact is to know all usage of tools and follow own strategy confidently. A chart will help you to find out the latest price update. Historical assets will ease the process of identifying the supply and demand zones for traders. It informs us about the current price.