Forex trading is all about exchange rates and data generated from them. These data are usually displayed or represented in Forex trader chart to assist the trader in having a good time studying them and also drawing valid conclusions from them. Forex trader chart simply put, are a group of pictorial representation of data generated from the exchange rates in the market and presented to the trader for the main purpose of studying, planning and prediction of future rates.
TYPES OF FOREX TRADER CHART
Forex trader chart come in three main types namely;
1. LINE CHART
A line chart as the name implies is made up of a series of dots that are connected by a line. They are very basic and do not provide the trader with adequate information to reach a valid conclusion concerning the market. This disadvantage of not being able to provide the trader with adequate information is the major reason why most traders run away from it. As an advantage, the chart is easy to read.
2. BAR CHART
Just like every other bar chart, the bar chart is made up of bars. These bars are used to show the opening and closing prices, as well as the high and low for the period of the bar. The top of the bar is taken as the highest point in the price reached while the bottom shows the lowest price. Bar charts are also known as OHCL charts (Open, High, Close, Low).
Bar charts tends to provide more information about a currency than the primitive line charts. Even with this advantage, many of the traders still find it hard to read the charts. Due to the number of bars contained in the bar charts, it usually confuses the trader on how to be able to keep track of the prices in the market.
3. CANDLESTICK CHARTS
The most advanced and easiest to use forex trading chart is the candlestick chart which was originated from ancient Japan. These charts were formerly used by Japanese rice traders to keep a track of changes that occur in the price of rice. Although they are very similar to bar charts, most of the traders prefer to use them instead of the line or bar charts. Unlike the bar charts, the candlestick charts have bodies with the opening and closing prices at the top and bottom of the candlestick.
The candlestick is much more easier to use since the trader can easily see where the market opened and closed. The chart also comes in colors to tell the trader at a glance if it is a up or down chart.
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.