Top Forex Charts and How to Read Them

Top Forex Charts and How to Read Them

frx stock netdania: Learning the basic skills required to trade Forex, such as reading forex charts, is extremely important for a trader. This is because once you add this vital skill to your knowledge base, it will be much easier for you when the time comes to learn and practice real forex trading.

For successful trading, it is important to conduct market analysis correctly. Almost all traders use forex charts to predict price movements and analyze the current state of the market. Forex trading charts are the foundation of technical analysis, so every trader should understand the charts. Of course, it is a little more complicated than overwatch betting, but the essence is the same. To predict the result and become a winner.

What is a Forex Chart?

As you already know, every asset has a price, and it is constantly changing. The schedule is built from this stream. For the price forex currency charts, a rectangular coordinate system is used, where the x-axis (horizontal) is the timeline, and the y-axis (vertical) is the prices.

What is a graph?

The price scale is always unchanged and is graduated by the minimum price change – a point. The time interval can be changed, and the chart scale convenient for forex charts technical analysis can be set. The scale for a Forex chart is called a period or a timeframe by traders. There are nine of them in MetaTrader 4:

  • M1 – minute
  • M5 – 5 minutes
  • M15 – 15 minutes
  • M30 – 30 minutes
  • H1 – sentry
  • H4 – 4 o’clock
  • D1 – day
  • W1 – weekly
  • MN – monthly

Which period to use in the forex daily charts trading system depends on the type of strategy: scalping, usually M1 and M5, intraday M15, M30 and H1, medium or long-term from H4 and higher.

Next, let’s consider the main types of free forex charts graphs for display. But first, you need to understand what the opening and closing prices are, the maximum and minimum prices are. frx stock netdania

And so, the price moves, time passes, the chart shifts to the left after a set period, for example, M15. In each period of 15 minutes, the price changes many times, and it would be unrealistic to display all this movement in one vertical. Therefore, to display the charts, the terminal remembers only 4 prices from any given period of time:

  • Opening price (Open) – the price at which the next time interval was opened.
  • Maximum Price (High) – the highest price for the time interval.
  • Lowest price (Low) – the lowest price for a time interval.
  • Close price (Close) – the price at which the next time interval was closed.

You should also remember that the last time period is always incomplete, and its closing price will be equal to Bid.

Line Chart

This type of graph display is perhaps the simplest. A line chart is a line that connects the closing prices of the periods. And its only advantage is easy readability. These best forex charts are suitable for identifying long-term trends and analyzing the overall market trend. The main disadvantage of the line chart is that it is not informative. And this is understandable because it shows only one price from the time period. It is impossible to assess the real price movement, and gaps are not visible, which makes it absolutely unsuitable for technical analysis. This type of chart is not popular and is rarely used by traders. frx stock netdania

Bars

Bar charts contain all four types of prices described above (Open, Low, High, Close). Unlike the line chart, which contains only Close, the bar chart is more informative. These forex stock charts are displayed as bars. The bar is a vertical segment representing the maximum and minimum prices. And two dashes to the right and left of it, the opening price is to the left, the closing – is to the right. Each time period of the chart corresponds to one bar.

Bar live streaming forex charts perfectly convey the price movement within the time interval, and all gaps are also visible. They are perfect for technical analysis. It is convenient to use indicators on such a chart. They work with various graphical instruments and identify patterns. frx stock netdania

Japanese Candles

This is the most popular type of chart; it differs from the bar chart in a more visual and readable form. A candlestick chart consists of candles. The candle consists of a rectangle-shaped body and two shadows in the form of vertical segments above and below the body. frx stock netdania

The candlestick body denotes the opening and closing prices; upward of the body is a large price from the opening and closing, and the bottom is correspondingly lower. And what was higher? The color of the candlestick will show the closing or opening. By default, in the MetaTrader, black is a downward candle (the open price was higher than the close), white is an upward candle (the open price was lower than the close). Shadows indicate the minimum and maximum prices.

One of the uses of Japanese candlesticks is in repeating combinations – patterns. There are many classic patterns, such as bullish engulfing, dark cloud cover, or three black crows, all of which have detailed descriptions. In addition to the classic ones, traders, observing the charts, mark their own unique models, and all this is successfully used in understanding forex charts and trading.

Tick ​​Charts

This type of chart is not standard, and in the MetaTrader terminal, it is displayed only in the “Market Watch” tab and in the “Order” window when you open it. It can be displayed on the main chart only using indicators. The tick chart is similar to the line chart but differs in the absence of time-scale periods. This chart is the smallest in scale – a tick. The tick chart takes into account absolutely all prices received from the broker. With the arrival of each new tick, the chart shifts to the left and connects the new price with a line.

Although some scalpers use these charts quite successfully in their strategy, this type of chart is not very suitable for market analysis. Basically, it is only suitable for placing exact stops on orders.

Conclusion

We have reviewed the most common types of Forex charts that are found in all trading terminals and explained how to read forex charts. And for a complete analysis of the market, knowledge of these charts will be enough to win money online. There are many more types of charts used by traders, such as Kagi, Renko, Heiken Ashi. We will look at some of these graphs in future articles.

If you still have questions, ask in the comments. We will be happy to answer them.

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