How to learn forex trading charts

The market of foreign exchange (also known as FX or forex) happens to have developed as a global marketplace for exchanging national currencies, over the last couple of decades. And, charts have a very important role to play when it comes to trading. For online forex trading, charts are one of the best ways to track your money. Today, the business has come to your home or office on a small screen in front of you – on your laptop or desktop! With online forex trading, you can keep a close track of the rise and fall in the process of forex Typically there are three charts used to explain and track the forex trading. In this article, we will see what these forex charts are and how are they important in forex trading?

Line charts in forex trading:

As the name itself suggests, these charts use the concept of tracing the forex trading for the various currencies across the globe in lines. The Line charts are very useful to track the trends that a particular currency is following over time. Line charts are one of the basic types of charts used by forex traders.  One can use different colored lines to compare the different currencies at a certain point in time. Or, you can simply use the lines to study how the value of a particular currency that you have invested in or are interested in has changed over a while. The main utility of these line charts is that their simplicity in depiction helps one to visualize, compare and strategize.  For instance, you can learn more about a trend line on a line chart and identify breakouts or a variation in their prices. 

A line chart is a very good tool for developing strategies and analyzing for beginners. 

Bar charts in forex trading:

Bar charts are used to represent the variation in prices in currency over specific periods. Bar charts are much better than Line charts, as they give more detailed information about the rise and fall in prices of currency. Every single bar on the bar chart represents the opening price, peak price, lowest price, and closing price during the trading of the forex on one day! While a dash added to the left indicates the opening price for forex trading of that day, a dash on the right signifies the closing price for the same. At times, the bars are made with different colors, to represent the movement of prices in forex trading. Several softwares use bar charts with green or white lines to indicate the rise in price and red and black lines to indicate a fall. The software automatically tracks the prices of forex on the online platforms as the trading goes on during the whole course of the day.

Bar charts are primarily used by the online forex traders experienced traders to identify the type of market - whether it is a buyer’s market or a seller’s market. 

Candlestick charts in forex trading: 

Last but not the least, Candlesticks charts are an excellent visual representation that is far easier to interpret than the line charts or the bar charts, developed by the Japanese. The candles are used to represent forex trading. Each candle in the candlesticks chart is divided into two parts. While the upper part of the candle shows the opening price and the highest price of a particular currency, the lower one represents the lowest price and closing price for the day. A candle that is turned upside down represents a fall in price with red or black shading. An upright candle represents an increase in price with a while and green shading. Any formation and shapes mentioned in the candlesticks chart specify the direction and movement. Hanging man and shooting star are the common formations constructed with candlesticks chart in forex trading.

Charts are an analytical way of interpreting the patterns of variations in the rise and fall of prices in forex currencies. To become an expert in online forex trading, it is essential to track, interpret and understand how a forex market and its trading operate? Charts help to establish the understanding very easily – with clarity. Whether you are a beginner or an experienced trader, you do not have to waste your precious time speculating. Charts make following trends in prices easier, which in turn helps to develop better and fruitful strategies.

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