How Do I Analyze Charts?
How Do I Trade Charts?
In forex - the chart is the basic tool used by traders to trade the market. The chart will show info about price movement - the chart will illustrate the general direction of prices - oftenly referred to as trends or price trends. The chart will also show the ruling price and the historical movement of chart prices.
Traders use these charts to identify where to place & open trades. From the chart the trader will interpret price movements using technical indicators so as to identify and determine the direction of the trend so as to determine the trade to open - whether a buy or a sell trade.
Traders must know how to use charts before they can begin trading forex.
The following are the different aspects of charts that one will need to know about charts.
Types of Charts
There are three types of charts
Line Chart - this line chart technique draws a continuous line that joins the closing prices. For example if a trader is using 15 minutes chart then this line chart will draw a continuous line that connects closing price of the market after every 15 minutes.
Bar Chart - This bar chart use bars to illustrate price movements & draws OHCL - Opening price, High price, Low price, and Closing price for that chart time period, for example if the chart time period used is 15 minutes chart, the bar chart will represent the price data & the OHCL forex points for the `5 minutes chart.
Candlestick Charts - These candle-sticks charts are the most popular chart types because they're the most visually appealing charts & they represent the price movements in an easily identifiable way which clearly displays when prices move up or when prices move down using different colors to differentiate the direction of price movement. These candlesticks chart look like a candlestick & they have a body that resembles the wax part of a candlestick & an upper and a lower poking line that resembles the wick of a candle.
Chart Periods - Chart Time Frames
A chart will draw charts based on different chart time periods - these are 1 minute chart, 5 minute chart, 15 minute chart, 1 hour chart, 4 hour chart, 1 day chart, 1week chart and 1 month chart. The chart period used to plot chart price data also is referred to as a chart time frame, for example the 15 minute chart period is commonly referred to as the 15 minute chart by traders. This 15 minute chart timeframe will represent price data for the 15 minutes of forex, after those 15 minutes another set of price information will be used to draw another chart representation. For examples if a trader is using candlesticks chart, the price data of one candlestick will draw price data of that 15 minute, after those 15 minutes another candle will be plotted using price data of the next 15 minutes - when these candlesticks are combined they then make a forex graph/ chart representation that displays the general direction of prices often referred to as the trend. Traders then can use this chart information to make forex decisions.
The most often used charts are candlesticks charts.
How Do You Read Charts?
The candle-stick charts use candle-sticks which have different colors to represent the price move - blue candles show prices closed higher than they opened - red candles show prices closed lower than they opened. This candlestick color representation is then used by traders to determine when the price has moved upwards or downward.
The candle also show OHCL:
O - Opening Price
H - Highest Price
C - Closing Price
L - Lowest Price
These price points are represented using a formation which looks like a candlestick with wicks on both ends, the distance between opening price & closing price is represented by what is referred to as body of the candlestick - this part resembles the wax part of a candlestick. The high price is represented by a poking line protruding upwards - this line resembles the wick of a candlestick - the low price is represented by a poking line protruding downwards - this line resembles the wick candlestick facing down.
How Do You Analyze Charts? - How Do I Read Charts?
The Japanese candles patterns techniques also have very many candle-sticks patterns which are used to trade the Markets. These patterns have different technical analysis & most common are:
| Reversal Patterns Candles Patterns Candle Patterns |
How Do I Read Candles Patterns?
How Do I Interpret Charts? - How Do You Analyze Charts? - How Do I Read Charts? - How Do You Trade Charts?
