In the forex market, historical price data are visualized as charts. These different types of forex charts are essential to forex trading as they are the means of making a major type of analysis in forex. Price charts in forex and stock trading are used in technical analysis.
To learn more about technical analysis click here.
Price charts are practically indispensable to forex trading. Therefore, every trading terminal always has some sort of charting interface.
The forex chart is a plot of price against time.
The Types of Forex Charts
The line chart
A forex line chart is plotted by connecting the closing prices of the instrument at the end of each timeframe segment. The timeframe segment might be a minute, an hour, or even a month. The closing price is taken as joined to the previous one to form a line chart.
The bar chart
The bar chart is a type of forex charting that has the bar as its unit. Each bar represents the timeframe segment i.e the time it takes for the bar to form. The bar chart displays the open, high, low and close prices in each bar. This is a lot more detailed than the line chart.
The candlestick chart
The third type of forex chart is the candlestick chart. This chart is made up of candlesticks. Each candle has a body and two wicks, one below, and one above. The candlesticks also show the open, high, low and close prices of a given asset for the timeframe unit.
These different charts are plotted in different timeframes. A timeframe is the time required for a particular chart element (bar or candlestick) to form.
To learn more about chart timeframes click here.
In conclusion, these different chart types have their different uses and appeal. Today, the candlestick chart is the most popular and widely used.
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