Chart Types: Candles Charts - Line Charts and Bar Charts
In trading, there are different chart types that traders can use in their trading. These chart types are provided on the forex platform software and on the trading platform, traders can then choose which chart type is best for their trading method. A trader can choose to trade with forex line charts, bar charts or candlestick charts.
A Forex chart is a graphical representation of price movement of a currency pair over a given period of time.
The chart is drawn on a grid and the user of this chart is at liberty to choose which chart time frame they want to trade with. The trader might select to use hourly charts, daily charts or even minutes chart time frames.
To draw forex charts, three techniques are used. The techniques used to draw the charts defines the type of chart.
The three types of charts are: Candle Charts - Bar Charts - Line Charts
- Line charts
- Bar charts
- Candles charts - Most popular
Line Chart - MT4 Line Charts
A single line is plotted from one closing price to the next, forming a continuous line.
This type of chart provides very little data on the chart & is therefore not very popular among traders. In fact this type of chart is rarely used by traders.
Line Chart in Forex Trading - This type of chart leaves out important data about price movement. Information such as opening, high & low point of the price that are not represented on the graph.
This makes this type of forex line chart to be considered sketchy by forex technical analysts.
The chart below shows example of a line chart.
Bar Chart - MT4 Bar Charts
Forex Bar Charts - This type of chart shows the opening, closing, the high and the low, for a particular forex price interval and is represented by bars that look like the ones drawn below - hence its name bar charts
- Bar Charts - bar chart has a vertical bar showing the total price movement.
- Left horizontal bar the opening
- Right horizontal bar the closing
- High and low denoted by the highest & lowest point
However, these bar charts are not very easy to work with, especially when they are not magnified. It becomes very hard to interpret the bar charts with ease when trading the forex market thus making them not very popular among traders.
A Bar chart that is not magnified makes it hard to view the opening & closing price as illustrated by this example:
Candle Chart - MT4 Candles Charts
Candlestick Charts - This is the most widely used type of charts, they resemble candles, thus their name - candles charts.
Candle-sticks charts shows opening, closing, high & low of a particular price interval.
The range between the open price & the close price is called the body of the candle-stick.
Forex candlesticks charts is the most popular type of charts among online traders because it is easiest to interpret when trading the FX market. Forex candlestick charts also gives a lot of information about the price movement. This makes candlesticks charts the most widely used type of charting in FX.
Candles Charts Example
Shown Below is example of candle charts. To learn more about candlesticks charts, read this topic: Technical Analysis of Japanese Candlestick Patterns in Forex Trading.
How to Select These Chart Types on MetaTrader 4 Platform
To draw any of these types of charts on the MT4 Platform a trader can use the buttons below found on this MetaTrader 4 platform.
Drawing Charts in MT4
- To Choose a Bar Chart Click the Bar Button
- To Choose a Candles Chart Click the Candlestick Button Key
- To Choose a Line Charts - Click the Line Button
