How Do You Read a Forex Trading Candlestick Chart?
A beginners guide to forex trading - how to read forex charts. The 3 types of forex charts are line chart, bar chart & candle chart - these oftenly used forex chart types are covered in this guides and beginners can learn how to interpret these charts from this tutorial.
This tutorial will show you how to read these forex candlesticks charts that are commonly used in the forex trading market.
How to Read Candlestick Charts for Beginners
Line Charts - forex line charts draws a continuous line connecting closing prices of a currency pair.
Forex Line Charts - How to Read Candlestick Charts for Beginners
Bars Charts - forex bar charts are displayed as sequence of OHCL bars. O H C L represents OPEN HIGH LOW and CLOSE. Opening price is displayed as a horizontal dash on left & closing price as a horizontal dash on right.
Forex Bars Charts - How to Read Candlestick Charts for Beginners
Main disadvantage of a bar charts is that it is not visually appealing, therefore most traders don't use them.
Candlesticks Charts - these forex candles charts use the same price data as bar charts (open, high, low, and close). However, they in a much more visually identifiable way which resembles a candle-stick with wicks on both its ends.
How to Interpret Candles Charts
The rectangle section is called the body.
The high & low are described as shadows & plotted as poking lines.
Forex Candles Charts - How to Read Candlestick Charts for Beginners
The color of the forex trading candlestick is either blue or red:
- (Blue or Green Color Candles) - Prices moved up
- (Red Color Candlesticks) - Prices moved down
Most Forex trading platforms like the MT4 Software, use colors to mark the direction of the price. Candles colors used are blue or green: when price moves upwards, color of candlestick is blue: when price moves downward, color of candlestick is red.
Candlesticks Charts vs Bar Charts - How to Read Candlesticks Charts for Beginners
When Forex candlesticks charts are used it's very easy to see if the price moved up or down as opposed to when bar charts are used.
