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Different Price Charts Every Trader Should Know

Posted December 15, 2020 by EasyFinance.com to Investing 0 0

What does a chart do? Well, it can do many things. A chart can allot different data according to their individual categories. It can show different statistics in a particular context. It can present something’s historical or contemporary information. Regardless of what a chart does on the surface level, at its core, it provides well-distributed data for further inspection.

Different Forex Charts

To know how the price of a pair moves, one needs some definitive ways to examine its past and present course. All the traders who use technical analysis need to understand a price chart. A chart reflects a price’s trail of a currency pair.

All the popular charts which are being used amidst the CFD traders can be of three major types.

  • Line
  • Bar &
  • Candlesticks

Each of them has their way of telling people the implied meaning of a price movement. By comprehending all of them, a trader can have more options in their hand to unearth the hidden meaning of a market turn.

Let’s dive in:

1. Line Charts

It’s nothing but a depiction of the trail followed by the price. It creates a connecting line from one closing point to the next. This line efficiently shows all the market moves. But they are not always credible as they cannot depict the market’s intention in detail. Those who are new in the Singaporean trading community, can rely on the demo platform to study the basics. Get it from here and start enhancing your knowledge about the key trends in practice account.

However, they help speculators to observe trends with greater comfort and less effort. Speculators can compare different closing rates in the context of consecutive periods. Line charts are used to capture a bigger picture of the asset movement’s view.

Finding a trend is just as easy as noticing a slope made by a line. However, there are traders who just emphasize observing closing level and ignore the low, high, or open. But its actual course gets ignored if a trader only focuses on the closing price.

2. Bar Chart

A bar chart is more complex than a line chart. It presents the closing and the opening prices and also the lows and the highs. It also provides data that line chart fail to provide. Bars allow traders to observe the price range of different periods.

A group of bars or even two juxtaposing ones may vary in size. All bars are vertical, and their bottom signals the minimum traded rate for a particular time period. The top bar shows the maximum paid price.

A currency pair’s range has been indicated as a whole by a vertical bar. Smaller bars are a clear depiction of a market’s low volatility while higher volatile market condition makes larger bars. A bar also shows records of the opening and the closing rates of a period with attached non-vertical or horizontal lines.

The horizontal hashes on both the left and the right side are, respectively, the opening and the closing price. A bar is nothing but a time segment which can be of a single day, or a week, or an hour.

3. Candlesticks Chart

The above-mentioned one and the candlesticks are basically the representation of the same information. The latter is just a graphic format.

The candlesticks are easy to read and present data with much more attractiveness. Like the bar charts, candlesticks also show the high-to-low span with a similar vertical line. But it has a larger block that remains at the middle and represents the opening and the closing prices.

Bars in a candlestick can be of two colors: green and red. The green is for a bullish trend, while the red is for a bearish trend. Instead of green and red, they can be black or white.

Other than these three, you may find more charts to analyze the market. You may want to learn them too. 

However, these three are the most common and popular among the general traders.

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