How to read forex charts
Charts are a key tool in understanding the Forex market. They show where low prices or high trades might occur, which can give an edge on currency exchange.
But many beginners think it is too difficult to read charts and just give up quickly. We are here to say to you – don’t worry! Reading charts is not as complicated as it seems.
And we are going to show you how to read different types of them now.
Let us begin.
What is a forex chart?
Forex charts are a trader’s assistant. They help you see what prices have been doing and how they have changed over time. This can help you make decisions about trades quickly.
Forex charts use two coordinates: price and time. The vertical axis is for the price and the horizontal one is for time. This helps explain how different types of Forex charts are made.
Types of forex charts
There are three main types of Forex charts: line, bar, and candlestick. Each one shows the same information in a slightly different way.
Line charts are the simplest kind of Forex chart. They only show the closing price for each time period. This makes them easy to read, but you can’t see how the prices fluctuated during the period.
Bar charts show the opening and closing prices, as well as the high and low prices, for each time period. This makes them more informative than line charts, but they can still be difficult to read.
Candlestick charts are the most popular type of Forex chart. They show the opening and closing prices, as well as the high and low prices, for each time period. For those interested in Forex trading read about forex brokers in Nigeria to see regulated brokers.
How to read line charts?
Line charts are graphs that connect points with a straight line. This is how the whole information is shown. This type of chart is very easy to read.
The chart shows the prices of a currency pair over time. Each day’s closing price is represented by its own line on the graph.
How to read bar charts?
When you look at a bar chart, the lowest price for a certain period is at the bottom of the vertical bar. The highest price is at the top. The prices on the left and right sides of the horizontal line are the opening and closing prices.
How to read candlestick charts?
The candlestick chart shows the same data as other Forex charts. The vertical axis shows prices over time. If a currency pair closes at a lower price than it opened, then the block will be colored red (as an example). If they close out at a higher price, then the block will be colored blue (as an example).
Conclusion
Forex charts are an important tool for traders. In order to make money trading currencies, you need to be able to read charts and understand what they are telling you about the market. See some of the forex no deposit bonuses available to traders in Nigeria. The article introduced you to 3 common types of forex charts and the ways to read them. Once you know it, you can use that information to make informed trading decisions.
Author
George is the Chief Market and Broker Analyst at brokertested.com. Prior to being recruited by brokertested.com, I served SVS Securities as Chief Market Analyst for two years. Earlier, he joined Morgan Stanley in Nov 2013 as Research Analyst.
George is a well-rounded financial services professional experienced in fundamental and technical analysis, global macroeconomic research, foreign exchange and commodity markets and an independent trader.
