October 23, 2013

Do You Need Forex Charts?

This article covers the various types of forex charts available to traders.

Forex Charts for Trading

When you trade in the forex market, you need to keep abreast of all the news announcements and data releases that could affect your currency pair’s rate.  You need to have a clear vision of the trends in this market and what they mean for the future.  For you to trade profitably in this market, you have to find easy methods to show you when and how you should enter your trades.  Forex charts and graphs are an excellent method to obtain easy visual views of your currencies.  You can view current, as well as historical trends in this manner.

Forex Charts Availability

You can find a range of forex charts if you search online.  There are many websites that offer you these charts as well as information related to forex rates.  When you register with a forex broker and use their trading platform, you will normally have access to different types of charts.  You should not think that the best charts are the ones with a huge amount of information on it.  Charts that are suitable for other traders may not be suitable for you.  You need to find charts that offer you the information you require to enter profitable trades.

Line Charts

These are the simplest and most common form of charts.  The chart is used to show the overall trend of a currency over a specific period of time.  The value of the currency is plotted over the time period and connected by plotted lines.  This chart is useful if you wish to see the trends of a particular currency.

Bar Charts

Bar charts offer you more information than line charts do.  The chart shows you the trends and provides you with an indication of the opening and closing prices of a particular currency for a specified time period.  You can obtain bar charts that provide you with more insight and information on the foreign currency and this offers you a more efficient manner to predict trends.  Many beginners in the forex market are confused by the added features of this type of chart.

Candlestick Charts

Candlestick charts are similar to bar charts.  This is an extremely popular chart in the forex market.  These charts make use of colour, normally green and red, to display the relevant data.  The red section normally shows the closing price of the currency, if the price is lower than the opening price.  The green colour is used if the closing price is higher than what the currency opening price was.

Candlesticks are easy to read graphs and this allows you to make quick decisions on the trends that are present.  Some candlesticks do not make use of colours and are normally in black and white.  The black and white hold the same data as the red and green.

Point and Figure Graphs

Point and figure graphs are not very commonly used, however they are thought to be one of the easiest to read.  The graph uses symbols instead of bars and lines.  The symbols that are used most regularly are O and X.  These are used as an indication of whether there was a decrease or an increase in the currency price.

To try and decide on the most suitable forex charts for your needs, you should ensure that you feel comfortable using the chart.  If you are confident about reading your charts, your decision-making process will become simpler.




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