3 Types of Forex Charts Every Trader Needs to Know
Chart Type
In order to know the pattern of price movements easily, then the price data is described in the form of charts. There are several types of charts that are commonly used, including:
- Line Chart
- Bar Chart
- Candle Chart or candlestick chart
Line Chart
In general, all charts have the same vertical and horizontal axes. The vertical axis shows the price, while the horizontal axis shows the time. Line charts are the easiest charts to read. The form is a line that shows the closing price in that period
Line Chart example
Bar Chart
Bar charts and Candlestick charts are almost similar because they contain Open, High, Low and Close prices. Usually abbreviated as OHLC
Line Chart detail
Bar Chart consists of rows of bars shaped like poles with small horizontal lines on the right and left. The highest and lowest prices can be seen from the vertical line. While the opening price can be seen from the left horizontal line. The closing price can be seen on the right horizontal line. In the picture above the blue bar chart the price goes up at the close. While the red bar chart prices fall at the close.
The picture below is an example of a bar chart
Bar Chart example
Candlestick Chart
Candlestick Chart example
Candlestick Chart consists of rows of bars shaped like candles. The highest and lowest prices can be seen from the vertical line, while the opening and closing prices can be seen at the limit of the candle body, either up or down. Candlestick charts have 2 colors that indicate prices go up or down. Usually the color is White (Green) and Black (Red). White color closure. While on the contrary, the black color indicates the price coming down near the close.
Chandlestick chart example
A bar or candle shows a period of time. For example we choose to use a chart with the Daily timeframe (D1), then 1 candle means 1 day. If there are 5 candles, the price has moved for 5 days. There is one thing you need to know about charts. The interpretation of stock / forex charts can vary depending on the type of price scale used. Two types of scales commonly used are Logarithmic and Linear.
Next read What is a Trend in Forex Trading and How to Identify
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