The most commonly used type of chart in Forex trading, is known as the line chart. They are quite popular, especially among beginners. One of the reasons why these kinds of charts are popular among beginners, is because not only can they be very effective, but they are very simple and easy to use.
The Forex line chart is a style of chart that is constructed by connecting a series of data points together, in other words currency pair prices, over a specified time period in order to form a line. The line chart is the most basic style of chart used in Forex trading and in finance, in general. They allow currency traders to see how a particular currency pair’s price has moved over a specific period of time, as specified by the individual trader. For example, a Forex trader might use a line chart to see the price action of GBP/USD over the past 6 months.
Line charts are generally better for Forex traders who wish to take advantage and ride long-term trends, but also for those who wish to find correlations between different currency pairs and other variables, including commodities and trade defects. These sorts of charts tend to be provided by all good online Forex brokers. If you have a good broker, you should be able to access line charts from within your trading platform. These are better to use, since the prices you will see on the ones provided to you by your broker’s trading platform, will reflect the prices that you are actually given. Also, it is obviously a lot more convenient to use a line chart that is located within your Forex trading platform, rather than using one from an external source.
These types of charts tend to be effective when trading currencies, mainly because they are so simple, easy to use and keep track of. Line charts can be used very easily to spot directional changes in the prices of different currency pairs and exchange rates.
One disadvantage of using line charts, especially long-term ones, is that they do not show daily and short-term price volatility. Also, many Forex traders deem these types of charts as just too simplistic. Although they can be good for beginners just starting out, they perhaps aren’t ideal for all currency traders. You can notice how simple these sorts of charts are, by comparing them with other types of Forex charts, such as candlestick charts.
In conclusion, line charts are used in Forex trading by beginners mainly, however all kinds of traders and investors can take advantage of these types of charts. They are particularly good for those who want to avoid complexity and for those who dislike technical analysis in general. However, if you are serious about trading currencies in the Forex market, you might want to consider using other kinds of charts too in addition to line charts, as they are very simplistic. They can be used to spot long-term trends and Forex traders can make a lot of money by using these sorts of charts, but more experienced traders and investors typically use more sophisticated chart types to spot trends.