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How To Read A Forex Chart

Written By Trading Forex News on Sunday, October 11, 2009 | 3:41 AM

At first glance, you might find a forex chart to be quite confusing. With all the lines, the colors, and options, you may be intimidated into thinking that the forex cannot be traded by everyday people.

Well, don’t think that way. The forex can be, and is, traded by people just like you and me, and the basics of forex charts are very simple to learn. Let’s take a look at the 3 most common types of charts.

1. Line chart – the line chart is a very simple chart that simply connects the closing price with a line. A line chart doesn’t clutter the chart with a lot of information, and can really give you a feel for the market with just a glance. However, line charts may not show you all the information that you need. For example, if the market moves drastically but all the line chart shows is the close, then you may miss some very important information that could mean the difference between making money or losing money.

2. Bar chart – a bar chart shows you a little more information than the line chart while still providing a simple design. The bars in a bar chart show you the open, close, high, and low of the market. This allows you to see hours and days of market movements rather quickly, and this lets your brain recognize chart patterns that will help you become profitable. The bars on a bar chart are also colored to show you whether the market closed up or down.

3. Candlestick chart – a candlestick chart is very similar to a bar chart, but candlestick charts can show market patterns more easily. Candlestick charts take up more space than bar charts, so you don’t get as much information on one screen. But a candlestick chart also opens up a whole new world of candlestick patters that have made many traders a lot of money over the years.

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