An Introduction to forex chartadmin 29 June 2021
what you read here:
A Forex chart is considered as one of the important options in using technical analysis tools. Suppose you are planning to trade and invest in Forex. In that case, it is better to join us in this article to master the analytical tools by learning about different types of Forex charts and predicting the market correctly and lead your investment in the right direction.
Charts, in their literal sense, usually refer to numerical and statistical data that try to express the market trend in a specific and regular way by using one or more other factors. In fact, this data is used to simplify and make various topics tangible. We are all aware of the necessity of using technical analysis tools in the Forex market. But to show the price behaviors that occur in the market, it is necessary to investigate the data in the form of images. The best option is to use a Forex chart.
Related Article: best time frame for forex trading
These types of charts represent the trading trend using price data during a specific time frame. According to technical analysts, a Forex chart allows traders to predict future price movements by looking at past prices. Therefore, as a result of this prediction, a trader can quickly decide on entering a profitable trade, taking into account the amount of trading risk and probabilities.
Using various data to draw a Forex chart
Since these charts are based on price changes in a timeframe, learning how to read these charts is very important.
based on the above descriptions, the following data is used to draw the diagram:
open: The opening price of a symbol at the beginning of a trading session
close: the closing price of a symbol at the end of a trading session
high: the highest price
low: the lowest price
Related Article: MetaTrader 4 vs Metatrader 5
price charts express the supply and demand levels for any asset that can be traded in the Forex market. Different news can have tangible effects on the price of each asset; however, being aware of these changes can lead traders toward the best decisions.
Different forex charts
In the forex market, different charts are used for the analysis process, and each one of them helps you predict future prices by considering various factors. In the following, we will have a look at some of the most important charts.
Related Article: What is Heikin Ashi?
The linear charts, as its name implies, are created by linearly connecting price points. To draw this chart, you must consider the opening or closing price points. Despite showing the price in the period of time, this chart is less used today because it is simple and shows limited services such as opening or closing the prices.
The bar chart also referred to as the OHLC diagram in some texts, contrasts the line chart, which arises from horizontally joining points. This type of chart exists in the form of vertical lines, and it is also more complete than the line chart because it also shows the highest price and the lowest price in addition to opening or closing prices. Also, due to market fluctuations, the length of this chart can be changeable; it can be bigger or smaller. Several horizontal lines indicate the opening and closing prices on this chart; for example, based on what you see in the picture, open shows the trade’s opening price, and close shows the closing price of the trade.
The candlestick chart is more famous, and traders use them more than the other two types due to its beautiful graphic structure. Also, the information in this type of chart is just like a bar chart. But in addition to open, close, highest and lowest prices, with a relatively wide body, it also offers other information. For example, the colored body of this chart (it can be adjusted using different colors, which is usually black in normal mode and sometimes green in selected mode) indicates the movement of the market from the bottom to the top. Conversely, the hollow body of the chart (the red color is suitable for this mode) indicates a movement from top to bottom, which in fact, shows the downward trend of the market.
❓ How to use these charts in MetaTarder?
✅ As you can see in the picture, after opening MetaTrader, there are three options at the top to change the type of chart, and you can select the type of analysis you want. By using these charts, you can check the price in the past days and months and, to some extent, predict whether prices will increase or decrease in the future.
Charts show us the changes in price levels of the markets, and they can be used to measure the price of each asset in different timeframes, thereby helping traders increase their profit from trading. Selecting any of these charts will vary depending on what information the trader is looking for in the Forex market, but having enough information in this area makes the role of these charts more prominent.