There are three types of charts that are predominantly used by the traders and investors of the Forex market: the line chart, the bar chart and the candlestick chart. The line chart is the most common type of chart. The other two chart types are similar in the sense that they display the same information really, but through different visuals.
The line chart displays the day’s average currency pair price and exchange rate for a particular currency pair and sometimes it displays the closing price for a particular currency pair. The line chart is most useful to traders and investors who wish to find long-term trends in currency pair prices and exchange rates. The line chart is also useful to traders and investors who are looking to find correlations between currency pairs and other variables such as commodities and trade defects. Typically, any good online Forex broker will allow you to spot these correlations on their websites.
Line charts prove to be an effective tool when trading and investing in the Forex market. Line charts bear the main advantage of being simple, easy to read and easy to spot directional changes in currency pair prices and exchange rates. However, there is one disadvantage to line charts, which is that they fail to provide daily price volatility.
The bar chart is another chart used in Forex trading. The chart itself, much like other charts, has two notches on it. One of these notches represents opening costs and the other notch represents closing costs. Quite simply, the left notch represents the opening costs and the right notch represents the closing costs. The edges of each bar on a Forex bar chart, represent the highs and the lows of the particular currency pair’s price.
Bar charts do not bear many advantages, however new Forex traders and investors might find these bar charts as more accessible to them. However, the bar chart can make interpreting the data a slower process for the more experienced traders and investors. Traders and investors who are more familiar with interpreting bar charts may want to use candlestick charts.
The candlestick chart is evidently the more popular type of chart in Forex trading. They provide a much faster and more effective way to find out what has happened each day in the FX market.
Every good online Forex broker can provide each chart for you and these charts can be simply and effectively manipulated with ease and according to your needs. Both candlestick charts and bar charts can be switched around so that they represent different units – from representing the past minute right up to the past year. You can also manipulate line charts in a similar fashion.
In conclusion, all of the charts are different and you should really start working with them, as soon as possible, once you start your trading career. You will learn a lot more about them by directly working with them than by reading about them. Different Forex websites and brokers will provide charts with different appearances, but you really just need to find a good online broker that will provide them as standard, as charting services are one of an online Forex broker’s more important features. Although different websites will present different levels of quality and different capabilities, it does not matter if you are just starting. Your desire for complexity will grow as you become a stronger trader and investor. But first of all, you should find a good online Forex broker that can provide you with what you need in the beginning, so that you can make the very best start to your trading career.