Foreign Exchange Charts Basics
Learning the basics of foreign exchange charts is essential if you plan on being somewhat successful in the Forex market. Here are a few things that you need to know about Forex charts and how they work.
Types of Charts
When you start looking at the Forex market, you will notice that there are a few different types of charts that you could use. One of the most common types of charts is the Japanese candlestick chart. This kind of chart is named appropriately because it looks like there are little candlesticks all over the place.
This kind of chart shows the big body of the candle as the open and close price of the particular time frame that you are looking at.
The wick of the candle represents the high or the low for that specific period of time. This can be valuable information to know when you are trading the market.
Another one of the most popular types of live Forex charts is the line chart. With this setting on your trading platform, you will see a single line running somewhat horizontally across the page. This shows you the closing price of the currency pairs for that particular time frame. If you want to keep things simple, this is a nice chart to look at.
The bar chart is another one that you could use. This type of chart is very similar to the Japanese candlestick chart although it doesn't have the narrow wick coming out the top or bottom of the bar.
The reason that traders use foreign exchange charts is so that they can engage in technical analysis. Technical analysis is a type of investment analysis that deals with trying to find patterns in the pricing information of a security. The trader looks at the chart and tries to find a pattern that reoccurs for the currency pair. Then they place a trade and try to exploit this pattern for profit. Sounds easy enough, right?
Well, in reality, it can be pretty tough. That is, until you learn how to do it. At that point, you'll be able to spot a chart pattern from a mile away.
Return From Foreign Exchange Charts to Forex Charts
Return From Foreign Exchange Charts to Forex Trading