United States
  • Click to Call
Call Us: 1.866.367.3933

Forex Resources

Basic Forex Trading Chart Types

Interpreting lines, bars, and candles in Forex

A large majority of traders use charts extensively. Therefore, it is important to have a sound understanding of the basics of technical analysis.

Line Charts

A line chart is the simplest type of chart. As shown in the chart of EUR/USD below, the single line represents the closing price on each day. Dates are displayed along the bottom of the chart and prices are displayed on the side(s).

A line chart's strength comes from its simplicity. It provides an uncluttered, easy to understand view of a security's price over a given period of time.

Bar Charts

A bar chart displays a security's open, high, low, and closing prices for each time period. Bar charts are the most popular type of security chart.

As illustrated in the bar chart below, the top of each vertical bar represents the highest price that the security traded during the time period, and the bottom of the bar represents the lowest price that it traded. A closing "tick" is displayed on the right side of the bar to designate the last price that the security traded during that time period. If opening prices are available, they are signified by a tick on the left side of the bar.

Candle Stick Charts

Candlestick charts display the open, high, low, and closing prices in a format similar to a modern-day bar-chart, but in a manner that highlights the relationship between the opening and closing prices. Candlestick charts are simply a new way of looking at prices, they don't involve any calculations.

Each candlestick represents one period (a day, an hour, a minute, etc.) of data. This diagram shows how to read a candle:

The trader might choose different colors for their candlesticks (blue/red, white/black, etc), but the idea is always the same.

Now that you the different types of chart, learn how to read them.

Understanding chart types can be beneficial for Forex traders. Looking at historical patterns and charts can give some traders an advantage when combined with fundamental analysis and technical analysis indicators. Although past trading results are not indicative of future trading results. You can find the chart style that works best for you. Line charts have different advantages for viewing price data compared to bar charts or candlestick charts, which show highs and lows, opening or closing prices. Of course, there are other chart styles but the line, bar and candlestick charts are among the most widely used. Other charts are relatively the same in terms of the information they provide. By choosing a Forex trading platform that gives you a lot of charting options, you can get various perspectives on what others may be looking at.

Products

Platforms

Accounts

Services

Forex Resources

About FXDD

© 2014 FXDD

NFA #0397435MEMBER, NATIONAL FUTURES ASSOCIATION

You may check FXDirectDealer, LLC's (FXDD's) registration and that of its Associated Persons by visiting the NFA's Background Affiliation Status Information Center (BASIC) atwww.nfa.futures.org. *During normal market conditions. The spreads are not fixed and may fluctuate with market volatility. Click here to see our spread chart.

FXDirectDealer, LLC ("FXDD") (CICI 54930058T8RTMEHB3094) is a registered introducing broker NFA # 0397435

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.

ADVISORY WARNING: FXDD provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect's individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FXDD specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FXDD expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.