Traders
in the foreign exchange market use different kinds of charts to see the values
of currencies. With the help of the charts, the traders can analyze the FX
market and make their decisions. The charts have 2 coordinates which are:
1.
The time on the horizontal axis
2.
Price and tick volume or just one of them on the vertical axis.
The
charts are made with the help of the following data:
1.
Open Price: It is the price that is created when the trading
period is just beginning.
2.
Close Price: It is the price that is created when the trading
period ends.
3.
High Price: The highest point that the price reaches during the
trading period.
4.
Low Price: The lowest point that the price reaches during the
trading period.
Note: Trading period is defined as the time which helps in building
the charts. It is also called Time Frame.
The Different Charts in Forex Trading
Тick Chart
In
the tick chart, you can see changes in the unit price. Amongst all the charts
it has the smallest scale. These charts
are not limited by time intervals and the building of them is done on a
real-time basis. These are updated with every change of rate that takes place
in the market. The Ask Price in these charts is shown in the upper part while
the Bid is shown in the lower segment. Traders use this chart just to figure
the time when they should enter the market otherwise it is not used to analyze
anything else. Before determining the entry time based on the tick charts, you
must determine other required factors too.
Line Chart
The
line charts are built with only close price. Close price will automatically
become open price when it will enter a new period. If the trade is of a short
period, it is the most suitable charts to use. Since there is no information on
the open prices in this chart, it is not possible to determine the price
change. There is some
information missing in these charts yet the traders
the information has some importance.
Bar Chart
The
bar chart is made up of low and high prices both. The 2 prices here are
connected by vertical lines. In the graph, towards the left side are the short
strips which display the open price and on the left are the strips that display
the close price. In one bar you can observe all the changes in the price. The
price movements are shown by a set of bars. With this chart, you have the
option of observing all kinds o changes in the price happening in that
interval.
Candlesticks Chart
The
formation of the candlestick charts is similar to that of the bar chart. In the
chart, the main feature is the candles. The candles represent the distance
between close and open prices. The candles are represented by colors. The
difference between a close price and an open price is the shade of color. In
case the close price is less than the open price, the candle would be in a dark
shade like black and in technical terms, it is known as the bear color. The
color for the case where the close price is more than the high price, the shade
of color is light like white and the technical term for it is the bull color.
From the center of the body of the candle, you will be able to see vertical lines
intersecting and these are the shadows. Shadows also show higher prices and low
prices. The shadow pointing upwards is the upper shadow and it represents the
higher prices and the shadow pointing downwards is the lower shadow. It
represents the lower prices. Another term for upper shadow is hair and for the
lower shadow is tail.
Learn the Charts from a Mentor
To
get acquainted with the charts more you should start with a forex trading course. Make sure to invest your money in a good mentor. If you are
thinking of learning the art from Hafizzat
Rusli, be sure to go to the right source only. In the past scammers used a
fake profile of Rusli because of which he came into the news headline like Hafizzat Rusli tipu. To not land up in
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