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Several types of charts

Traders use the charts for making market decisions and conducting the technical analysis. Charts are built in two coordinations: price or tick volume which we can see on the vertical axis and time period that we can see on the vertical axis. Some kind of data is used for creating charts:

 

1. Open price - formed in the beginning of the trading period;

2. Close price - formed at the end of the trading period;

3. High price - it is the highest price of the trading period;

4. Low price - it is the lowest price of the trading period.

 

The period of time is called timeframe, which is used for chart building. If the trader has this information and it is grouped together and given in a graphical form he can use it in his trading. There are several timeframes such: 1 minute, 5 minutes, 15 minutes, 1 hour, 4 hours, 1 day, 1 week and 1 month. Also, there are several types of chart building.

Line Chart 

Close prices of previous trading periods are used in a line chart where the graph looks like a curve. This type of chart will be better to use for short periods of time. The trader can not define price changes just with the one period because there is no information about the open prices.

Bar Chart

Low and high prices, that connected with each other by a vertical line are used to build bars chart. Short strips on the left show the one price and those on the right show the close price of the period. In the bar chart just one bar shows all the price changes over the period. The bar chart gives to the trader very good advantage to watch all the price changes during the trading interval. 

Candlesticks

Candlesticks are built the same way as bars. The candle's body is the main feature of the chart. Black or dark candle color is called bear color and when the close price is lower than open price, the body of the candle is colored in black. White or light candle color is called bull color and when the close price is higher than the open price the body of the candle is colored in white.



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Number of comments: 1
  • Zoran.dmitrov
    • #

    A good trader has to know how to distinguish the types of Forex charts, so I guess this is very useful information.