Understanding the three major chart in Forex market
Trading in the Forex market is all about detecting the price movement, as its value is always rising or falling. Traders have to just discern the nature of the movement of a price and predict how long the current movement will continue. Distinguishing these two factors will give a trader the necessary and right indication of when to enter or exit a trade to achieve the maximum profit.
What are the Charts?
Charts are the technical analysis system parts and are simply visual representations of different currency pair’s rates. Nothing can be more random than the changes in a currency’s rate.
With charts, traders try to visualize all the activities that took place till the current moment. All the images and terms used in all kinds of graphs are just reflecting actions that have already taken place. Traders deploy charts to track the current price movement and understand if it follows a pattern. This is because patterns are easy to trade and they provide traders with the most suitable conditions to get on a contract.
Charts that Analyze the Price Movement
Charts typically depict a shift in supply-and-demand. Charts are the record keepers of every transaction involving a particular financial asset. More likely, it is the ultimate result of all the fundamental elements in action.
Here are three types of trading charts that are exploited mostly by general traders.
A simple line that reflects the trail a price from one closing price to the next one is a significant part of a line chart. When we use a continual and seamless line, we can understand the overall price movement of a pair over a range of time.
The most favorable part of the lines is they are easy to capture, and extracting signs is also a straightforward procedure. However, the information projected by a line may not always feel sufficient to a trader. Most traders use lines to get a general and broader idea of the market.
Observing a trend with the lines is the best way possible. Anyone can identify a rise or fall of a movement just by observing the slope of a line.
Bars are another effective way to depict different happenings of the market. It is more complex than the lines. Other than showing the closing and the opening of a price, bars also show the lows and highs of a trading setup. Those who are using the trading platform from Saxo CFD broker can easily switch to bar charts and analyze the market from a different point of view. But pro commodity traders in Singapore prefer the candlestick chart as it is easier to read.
When analyzing the bars, a person will see different sizes of them, and each of these characteristics highlights different natures and features of the present market.
The bottom of a bar shows the lowest rate an asset gets to be traded at over a particular time. The top of a bar shows the maximum rate that an asset able to reach. Conversely, the height of the bars implies the range between the maximum and the minimum price of a period.
Different bar systems have their own way of indicating the highs and the lows. Showing these high-and lows are what makes bars more special than the lines.
Though we are discussing them discretely, candlesticks are just a variation of the bars. They are just a little more graphical and easier read to the traders. Like the bars, candlesticks show the high-and the lows using a vertical line.
Other than that, candlesticks implement different colors to indicate whether a trend was bullish or bearish. Candlesticks use upper and lower shadows to draw the buyer’s and seller’s domination over the market.
Candlesticks are complete and easy to understand. That’s why they incorporated in every platform, and all the giant trading companies use candlesticks for their efficacy.