Types of Forex Charts

There are basically three popular types of Forex charts. These include line charts, bar charts and candlestick charts and understanding each type will allow you to choose the chart that works best for your investing needs. A simple line chart will draw a line from one closing price to the next. When these prices are connected with a line it will allow you to see the general movement of price from currency pairs over a specific period of time.

Bar charts are a bit more complicated and require more of a learning curve than simple line charts. A bar chart will show you the opening price as well as the closing price. It will also show the highs and lows during specified time periods. The bottom of the bar chart will show the lowest traded price for a specified period of time. The top of the bar chart shows the highest price paid during that time period. The vertical bar included in a bar chart shows the trading range of the currency pair as a whole while the horizontal hash that is located on the left side of the bar chart is the opening price. The horizontal hash on the right side of the chart is the closing price.

The bar in general is one segment of time. This can be either a day, week or just one hour of time during which currency pairs are traded. When you use bar charts for your investments it is important that you understand the time differences that may be noted. Bar charts may also be referred to as OHLC charts because they indicate the Open, High, Low and Close for a specific currency.

Candlestick charts show basically the exact same information that is shown on a bar chart only in a more graphic format which is easier to understand for some investors. Candlestick charts show the high to low range with vertical lines however the larger blocks in the middle of the chart indicates a range between the opening price and the closing price. If the middle block is colored or filled in then the currency in question had a lower closing price than opening price.

A candlestick chart serves as a visual aid providing the same information that is shown on a bar chart. There are many advantages to using a candlestick chart in addition to a bar chart. Candlestick charts are much easier to understand and to interpret which makes them the ideal chart for beginning investors. It gives beginners the opportunity to learn how chart analysis works and to begin using charts for successful investing endeavors. They are very easy to use and investors will quickly learn how to follow the information contained in candlestick charts and to recognize the information provided in the bar notations. Research has shown repeatedly that visual effects help tremendously when studying and when investing. They offer specific patterns and names like shooting star that can help investors to learn and remember what each pattern represents. In addition, candlestick charts are excellent for identifying market turning points or reversals from uptrends to downtrends or vice-versa.

Using Forex charts will allow you to keep abreast of market trends and changes. This helps those just starting out in investing to learn more about these market trends and how to forecast trends for the future which could help to ensure your successful investing. You can find many examples of Forex charts online that will give you more information on how to properly read the charts and teach you how to use these charts for your investments. There are a variety of other charts available, although these three tend to be the most popularly used among investors today.