Forex Chart Types: Line, Candlestick and Bar
A Forex chart is a graphical representation of price movement of a currency pair over a given period of time.
Drawn on a grid and the user is at liberty to choose which time-frame they want to trade with. The trader may choose to use hourly, daily or even minute time-frames.
To plot, three methods are used. The method used to plot the defines the type.
The three types of are;
- Candlesticks- Most popular
A single line is plotted from one closing price to the next, forming a continuous line.
This type provides very little information on the chart and is therefore not very popular among traders. In fact this type is rarely used.
This type leaves out important information about price. Information such as opening, high and low point of the price which are not represented on the graph.
This makes this type of charting to be considered sketchy by technical analysts.
The diagram below shows an example.
This type shows the opening, closing, the high and the low, for a particular price interval and is represented by bars that look like the ones drawn below
- It has vertical bar showing the total price movement.
- Left horizontal bar the opening
- Right horizontal bar the closing
- High and low denoted by the highest and lowest point
However, these are not very easy to work with, especially when they are not magnified. It becomes very hard to interpret them with ease when trading the Foreign exchange market thus making them not very popular
A Bar chart that is not magnified makes it hard to view the opening and closing price as illustrated by this example:
This is the most widely used type, they resemble candles, thus their name.
This one shows the opening, closing, the high and the low of a particular price interval.
The range between the open and the close is called the body of the candle.
Forex candlesticks is the most popular type among online traders because it is the easiest to interpret when trading the currency market. Candlestick also gives a lot of information about the price movement. This makes it the most widely used type of charting in FX.
Below is an example of candlesticks. To learn more about candlesticks, read this topic: Technical Analysis of Japanese Candlesticks Patterns.
How To Select These MetaTrader 4
To draw any of these types of charts on the MetaTrader 4 Platform a trader can use the buttons below found on this platform.
Drawing Forex Charts on MetaTrader 4 Platform
- To Select a Bar Click the Bar Button
- To Select a Candlestick Click the Candlestick Button
- To Select a Line Click the Line Button