Forex Trading Chart: Uses, Types And More

Before trading charts became the norm, traders usually analyzed the forex market by looking at raw price movements or tape.

Thus, with the advent of charts, most traders use them for an easy graphical interpretation of market movement. The charts highlight trends, patterns, and other visual signals that can help you identify trading scopes.

In this article, we will emphasize the utilization, types, and other vital information on forex trading charts.

What Is a Forex Chart?

A forex chart highlights the altering cost of selected currency pairs over time. Like the other price charts, the x-axis highlights the time while the y-axis indicates the price.

Therefore, you can select the timeframe and showcase the trading data on the financial instruments you are analyzing, such as specific currency pairs.

Similarly, the trading platform you are using will likely have a default timeframe of one day, but you can alter it to reflect whatever duration you prefer. You can select any time duration from one month to two months.

How To Use Trading Charts For Effective Analysis? 

A trading chart provides a complete picture of live currency, commodities prices, and stock movement and underpins successful technical analysis.

Therefore, you can more effectively recognize patterns and trends and respond to cost action by typing in your chosen asset and applying moving averages and other technical indicators to boost your trading experience.

For more on technical analysis and how to use the trading platform, you can gain insights from index chart analysis for trading purposes.

Different Types OF Forex Trading Charts?

Different charts are used in forex trading and other technical analysis related to financial assets.

Depending on the trading styles and variations, one chart might serve you better than the other. Here is a list of the three most important types of forex charts.

1. Line Charts 

Line charts are the most accessible chart types to read. They showcase the close price for a stated time period, typically representing a continuous curved line that connects the dots and describes the changes in cost over a specific interval of time.

Therefore, the line chart offers a clear and simplified view of the current forex market situation. Similarly, they work best for people who want a quick glimpse of where the market is heading.

However, this chart type is ideal if you are a new trader who needs clarity and simplicity. It will further educate you about basic chart reading skills, which you can later develop to the latest level using the candlestick charts.

2. Candlestick Charts 

The candlestick chart is a variation of bar charts. It highlights the same price information as a bar chart but in an informative graphical representation.

Therefore, you might prefer this chart because it is not only elaborative, but you can also easily understand the information it wants to convey.

Thus, candlestick bars still indicate the high-to-low range with a vertical line. Here, the top and bottom of the candlestick reflect the opening and closing prices for the given period.

Besides, like the bar chart, this chart provides an excellent view of the open, low, high, and close of the price.

3. Bar Charts 

Bar charts are also known as OHLC charts (open, high, low, and close prices). This chart shows the price range for each period.

Therefore, the bar is constructed when the currency rate fluctuates. Thus, the vertical height of the bar is often reflected in a range between the low and high price of the bar period.

However, the charts can be tailored to display price data for various time frames, making them a versatile tool for analyzing short-term volatility or long-term trends.

Benefits Of Using Charts?

Getting accustomed to different chart types can eventually boost your trading as they deliver several advantages, including:

Visual illustrations of price movements can assist in examining significant patterns and trends.

Assisting you in spotting exit and entry levels that might help to be evident without a chart.

The ability to use technical analysis to confirm trades exit and entry-level.

Market sentiments and trade psychology represent extreme price movements. Similarly, they capture the in-chart patterns.

Use of historical data as it offers a perspective of price movements over various time durations.

Get Your Best Forex Charts Today

Various forex trading tools offer the necessary tools to incorporate technical analysis approaches using forex trading charts.

Similarly, you might prefer multiple time frame analyses to just one-time frame. This will permit you to view the currency pair in different time frames.

However, if you are a beginner in the forex trading market, we suggest you use a more extended timeframe.