How to Read Forex Trading Charts

Lovata Andrean

How to Read Forex Trading Charts
How to Read Forex Trading Charts

Rancakmedia.com – Many beginners don't know how to read forex trading charts correctly. In fact, stock charts show the historical changes in stock prices over a certain period of time. There are many shapes such as lines (line diagrams), bars (bar diagrams) and candles (candlestick charts).

This chart is one of the most powerful analytical instruments for investors and stock traders, as it allows us to recognize the existing market state and predict future stock price movements.

When reading stock charts we have to be careful not only about the direction of price movements. Evaluation of the direction of the actual price movement should be excluded until the second or third stage.

Time period is the number one factor to take into account when reading stock charts. Then we look at the direction of the price trend and many other factors. Interested in further exploration? Come on, read the review in full.

As a forex trader, it is very important for you to know how to read charts. You must be able to read price charts effectively if you want to learn technical analysis well.

The presence of charts makes reading price fluctuations from time to time easier for you as a forex trader.

Charts allow you to identify trends and find price patterns that then emerge to provide profits in trading.

3 Types of Charts Used in Forex Trading

If a trader does not know how to read charts effectively, it is impossible to execute a business strategy that requires the ability to read charts. In reality, a forex chart is basically a display that shows the movement of market values.

So before you know how to read charts correctly, you have to know the 3 types of charts used in them forex trading to help with analysis work!

3 Types Used in Forex Trading

1.Line Chart

Trading platform line charts are one of the simplest charts. These charts are often used by traders and technical analysts because complete data can be displayed. Line Chart is displayed as a line connecting closing prices.

Trades, for example, have closed at certain levels in recent days. Each of these closing price levels are connected in a straight line and here at any given time you can easily observe the overall price trend.

For example, trades close at prices on several consecutive days of 100, 200, 150, 250, and more. These prices are connected in a straight line so you can observe the overall price movement over a certain time period on this chart.

2. Bar Charts

Bar charts are one of the most favorite charts of American traders. Why is it? Thus, bar charts are easier to use than other charts because the bar units are simpler.

Although somewhat more complex than line charts, this type of chart offers information over a specific time period about opening, closing, high and low prices. Because this information is available, these charts are often referred to as OHLC (Open-High-Low-Close) charts.

  • Low is the lowest price ever traded in a certain time period.
  • High is the highest price during a certain time period.
  • The close on the small horizontal line on the right is the closing price.

The vertical line on this graph shows the price range during that period. The starting price in the image above is lower than the final price. But the starting price may at one point be greater than the closing price.

3. Candlestick Chart

What is a candlestick? Candlesticks are a type of price chart that technically reads price changes in the market finance. It is called Candlestick because its shape is like a candle. The chart originates from the country of Sakura and is also known as the Japanese Candlestick Chart.

You must have information on the initial price (Open), highest price (High), lowest price (Low) and closing price (Close) or better known as OHLC within a certain time period when you create a candlestick chart.

This chart offers information that is not too different from a bar chart. There is only a difference in “posture” between these two graphs. In a given period, the body represents the gap between the opening and closing prices. The body of this candlestick chart is usually black and white.

If the body on the chart is white, the price is at the bottom of the chart, otherwise the price is at the top if the body is black. If the starting price is below the closing price, this is generally referred to as a bull candle. The word bullish or bullish is used in technical analysis when market prices tend to increase.

The word bearish or bearish is used to indicate a decrease in price movements, so a candlestick with a price above the price is called a bear candle. You can use color combinations to make this chart more attractive and know the difference between bull candles and bear candles.

Many traders like to use these charts because opening, closing, high and low prices can be identified more visually than bar charts. Besides that, candlesticks included in one of the charts most frequently used by technical analysts due to its easily recognizable data presentation capabilities.

Observing Price Movement Patterns

Important Things to Know How to Read Forex Trading Charts

So, what are the important things for reading forex charts correctly?

1. Observe price movement patterns

You have to adjust the price movement pattern to the type of transaction you are making. If you want to buy, concentrate on currency pairs whose charts are developing. If you want to sell, look for currencies whose charts show a decline.

2. Check The Time Period Selected And Be Careful Of The Distribution

You don't need to worry when you observe good price movements. Carefully check the charts you choose, as there are certain features to adapt to your trading strategy in each time frame.

Make sure that the graph presentation is at the same time as your analysis. You can also focus on 1 entry time period so that the trading process can be more concentrated. You also need to take into account the difference between the selling price and the buying value to be able to interpret the chart accurately and precisely.

Ready to master these three charts accurately and correctly? Don't worry if you still can't read charts. By using a trial account, you can learn how to read excellent charts.

By using charts as a tool for technical analysis, you can identify trends and find price patterns that may benefit you.

How to Read Forex Trading Charts

Conclusion

Many beginners don't know how to read stock charts properly. Charts allow you to identify trends and find price patterns that then emerge to give you an advantage in trading.

You must be able to read price charts effectively if you want to learn technical analysis well. The presence of charts makes reading price fluctuations over time easier for you as a forex trader.

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Lovata Andrean

Hi, I'm Lovata, I'm not Ai but I am a content writer for SEO, Technology, Finance, Travel, Cooking Recipes and others. I hope this can be useful for all my friends. Thanks