Forex trading is one that involves the sale of a currency, and the purchase of another currency with the sole purpose of closing the position after a while with a profit. The price of a currency are usually quoted in any other currency due to the nature of every currency transactions where most historical forex charts are used to identify trends of a trade and its entry or exit points.
The forex trading chart in this context is visual aid that makes trends, and patterns more recognizable and generally easier to understand. It also makes the application of technical tools of analysis actionable with reasons as displayed in the charts. Most forex historical charts are characterized according to the way price action is described as well as the time frame in which the price action is examined.
TYPES OF FOREX HISTORICAL CHARTS
Here are some of the charts mostly used in the forex market and other finance markets
This is the simplest chart used in Forex technical analysis. The X axis in the chart shows the time passed and the Y axis in the chart shows the price of any given currency against another. This line chart has the tendency to draw a line from one closing price to the next closing price. Using this line, traders can see the price movement of a currency pair over a period of time.
A bar chart is more complex than a line chart. This chart shows the opening and closing prices including the highs and lows. The vertical bar shows the lowest traded price for that time period and the horizontal bar indicates the highest traded price. The horizontal line bar that is positioned to the left of each vertical line bar shows the opening price of that period in time while the horizontal line bar that is placed to the right of each vertical line bar shows the closing price of that period in time.
Candlestick charts represent the same price information as that of a bar chart, but in unique graphic format. These charts still indicate the high and low price range with a vertical line bar. The larger block in the middle of the chart indicates the range between the opening and closing prices. Normally, if the block in the body of the chart is filled or colored in, then it means that the currency pair closed lower than it opened.
In conclusion, forex historical charts are the keys that allow forex traders to unlock the secrets of forex trading. These charts cover a vast ground, and only by continuous practice can a forex trader expect to handle and become an expertise in evaluating them.
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