Types Of Charts In Forex Market

To become a successful forex trader it is very essential for traders to get familiar with the forex charts. Basically, charts are the graphical description of forex price movements over a specific period of time. There are two essential parameters in forex chart, the X axis represents time, and the y axis represents price. Charts are often used to make it easier to understand large quantities of data and the relationship between different parts of the data. In other words charts are a statistically noticeably technical analysis tool for a trader that wants to carry out successful trading. Charts also illustrate and represent the price history of a currency. There are types of charts in forex market. The following article shares a brief description of different kinds of charts in forex market.

There are three main types of charts in forex market, so let’s check out the different forex market charts in details:

Line chart

In line charts price changes are displayed using a line. In these kinds of charts the Y-axis represents time whereas the X-Axis shows the price. It basically represents the day's average price for a particular currency pair. However, line charts does not give additional information such as high, low, and opening price. It only provides the closing price over a period of time. It is useful for looking at long term direction of prices and for the correlation of a currency pair with other variables. Moreover, line charts are simple which makes it very easy to understand.

Bar chart

One of the other types of charts in forex is bar chart. Bar charts are the most popular type of security chart. In these types of charts, prices are shown in the form of bars. Like other charts it also has two notches one representing opening and one representing closing costs. The one on the left represents the opening cost; the one on the right represents the closing. The edges of each bar represent the highs and lows for the day. However, bar charts provide a better way to look at what is happening with the currency, compared with Line charts.

Candlesticks chart

Candlesticks charts also give information just like bar chart, but in a prettier, graphic format. These charts provide more detailed information as compared to Line chart. It not only displays the closing price, but also contains opening price, highest price, and lowest price during a time period. However, in candlestick charting, the larger block in the middle indicates the range between the opening and closing prices. Traditionally, if the block in the middle is filled or colored in, then the currency closed lower than it opened. This chart is one of the most popular types of charts in forex market.

By observing the highs and lows on a chart, you can identify the movement of prices in the forex market. So, move a step ahead in forex trading by getting familiar with the different forex market charts.