Forex charts can be defined as a forex trading tool that provides forex traders with the widest opportunity available in the foreign exchange market. ThisForex chart have the ability to generate graphical illustration that provides vital trading information for forex traders in the basics of currency pairs and commodities.
ADVANTAGES OF FOREX CHARTS
1. The major advantages of forex charts to forex traders is thatthey have the ability to generate good interbank rates which is gotten from an automatic and systematic selection currency data providers that carries a lot of updates on currency pair each day.
2. Forex charts have the ability to display historic and past trend data of currency pair. This is a very important aspect of the forex chart in that the information gotten can be used to identify and know price behavior studies.
3. Forex chart have great technical indicators that helps in the rapid detection of trends. This feature is only found on professional trading platforms. Forex charts helps in the identification of trends more easily which in turn detects trading opportunities. It is essential for the isolation of trends, removing noises on chart graphs and in the prediction of future prices.
TYPES OF FOREX CHART
1. THE CANDLE STICK FOREX CHART
The candle stick forex chart can be defined as a chart that helps forex traders to better understand the emotions involved in every currency day price. This method uses unique chart displays of open, high, low and close parameters. This candle stick forex chart is made up of wicks and the main body. The main body displays the conviction of the currency pairs while the wick shows a forex trader an overstretched emotion that may not hold.
In a candle stick forex chart, if the main or real body is seen to possess a greater number of the candle, it specifically indicates a trend candle because the currency action price closes near the period end but if the wick is seen to possess a greater number of the candle, it specifically indicates some flashing lights that warns a forex trader to stop a particular trade if trading with a trend.
2. THE BAR FOREX CHART
This bar forex chart provides the same type of forex trading information regarding the currency pairs as the candle stick forex chart. The only difference is that a bar forex chart indicates the open and the close including the high and low but without color indications. The forex traders who uses the bar forex chart actually considers the information on the open, close, high and low to be vital but have no need for colors in other to identify trades options.
3. THE LINE FOREX CHART
The line forex chart has the characteristics of producing the smallest amount of data. But it has the ability to generate information on the close parameter and most forex traders regard this information as the most important price of a day’s trade. The simplicity of the line chart is very needed in well-defined forex market trends.
In conclusion, adequate use of forex charts in forex trading maximally increases profits, eliminates /minimizes losses and manages risks.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.