The use of charts or charts is the most important thing in monitoring the price movements of various assets in the financial market, including to monitor exchange rates (exchange rates) in forex trading.
All types of forex analysis, both technical and fundamental, will use charts to assess current market conditions as well as make projections of future price movements.
Also read: Which is Most Popular and The Best Type of Forex Analysis?
Therefore, forex traders must know the various types of charts that are commonly used, in order to choose which one is most suitable for use in their trading activities.
Types of Forex Trading Charts
By understanding the chart, we can understand the long, medium, and short-term trends of a product, so that we can also make better trading analysis. This time we will discuss three types of charts that are often used in forex trading.
1. Line Graph (Line Chart)
Line Chart is the simplest type of forex chart formed by drawing a line from one closing price (Close) to the next closing price.
If assembled continuously, then we can see price movements as in picture in above.
Also read: What is Forex Market Sentiment?
2. Bar Chart
Unlike the Line Chart which only contains information on the closing price (Close), the Bar chart type also takes into account the opening price (Open), as well as the dynamics of the highest (High) and the lowest (Low) prices.
Therefore, Bar Charts are often also called OHLC charts (Open, High, Low, Close). For example like the picture above.
The streak to the left of the bar represents the opening price, while the streak to the right represents the closing price. The bottom of the bar shows the lowest price, while the top represents the highest price, in a certain time period.
The timeframe can vary according to the timeframe chosen by the trader, it can be 5 minutes, 10 minutes, 15 minutes, 1 hour, 1 day, up to 1 month.
Also read: How to Learn Forex Fundamental Analysis for Beginner Traders
3. Candlestick Graph
The Candlestick chart type contains the same detailed one-period price information as the Bar chart, but in a more beautiful and easy-to-read format.
OHLC is displayed in the form of a candle, with the wick made of High and Low, while the candlestick represents the difference between the Open and Close prices.
When the Open price is higher than the Close price, it means that there is a decline, so a Bearish candle is formed (red). Meanwhile, if the Open price is lower than the Close price, it means that there is an increase, so a Bullish candle is formed (green).
Also read: Learn Forex Technical Analysis for Beginner Traders
Best Chart Types For Forex Analysis
Among the three types of forex charts, the majority of traders use candlestick charts, because the information is complete and easy to read.
In addition, candlestick charts can form the formation of candlestick patterns that indicate turning points in price movements, so they are often considered high-accuracy trading signals.
Not all forex trading platforms install the Candlestick chart as the default chart. If the chart on your platform is still a Line Chart or Bar Chart, then just change it to Candlestick manually.
Usually there is an option to change the type of graph on the menu bar row. You can also modify the Bullish and Bearish candle colors yourself, it doesn’t have to be green and red.
If you do not understand the specific terms in forex on this page such as bearish and bullish, you can visit the Forex Dictionary. Take advantage of Forex Dictionary when you encounter new vocabulary for optimal understanding.