Charts can be a key tool in understanding the Forex market. They are auxiliary tools you can find on such trading platforms as Metatrader 4. As MT4 for pc is as convenient as on smartphones and other devices, reading forex charts now can be easier than ever.
Forex charts show where low prices or high trades might occur, which can give an edge on currency exchange. However, many beginners think it is complicated to read charts and just give up. We are here to say that you don’t need to worry! Reading charts is not as difficult as it seems.
In this article, we will introduce you to different types of charts and show you how to read them.
What are forex charts?
Forex charts help traders see what prices have been doing and how they have changed over time. This can help traders make decisions about their trades quickly. Forex charts use two coordinates: time and price. The vertical axis is for the price and the horizontal one is for time. This helps in explaining how different types of Forex charts are made.
Forex chart types
There are 3 main forex chart types:
1. Line charts
The line chart is one of the most basic and easily understood types. It is a great way to show the close price for each time period, but they don’t let you see how prices fluctuated during that same transaction.
2. Bar charts
Bar charts are a great way to show the opening and closing prices for each period, as well as how high or low they hit in that particular session. This makes them much more informative than line charts but can still be difficult at times.
3. Candlestick charts
Candlestick charts are a popular type of Forex chart that show opening and closing prices as well the high/low for each time period.
How to read Forex charts?
A line chart is a graph that connects points with a straight line. This type of chart is easy to read and shows the whole information at once. It is often used to show trends over time.
When you look at a bar chart, the lowest price for a certain period is at bottom of the vertical bars. The highest price can be found on the top and left side will show opening prices while the right-hand sides are closing values in each timeline shown above it.
The candlestick charts show the same information as other Forex charts,- but in a much more intuitive way. The vertical axis displays prices over time so you can accurately predict future movements by remembering how far each currency pair closed below or above its opening price point during any given trading day. So, If the price of a currency closes lower than it opened, then that block will be colored red. If they manage to close out at higher rates though then it will be colored blue. (colors are given as an example).
Forex charts can be an extremely valuable tool for traders of all levels of experience. In order to get the most out of these charts, it is important to understand what they are and how to read them. By trying out a few different types and using the tips we have provided, you should be able to find the chart that works best for you and start trading like a pro.
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