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4 Types Of Forex Trading Charts & How To Read Them For Beginners



In Forex trading, charts are essential tools that help traders analyze market movements and make informed decisions. There are three main types of charts used by Forex traders, each offering a unique way to visualize price data. 


These are the details of  the commonly used chart in Forex

Line charts

A line chart is the simplest chart type, showing price movements over time by connecting the closing prices of a currency pair at regular intervals (e.g., daily or hourly).


What It Shows: 

  • The closing price for each period.

When to Use:

  • Ideal for identifying general price trends over time. It simplifies data, helping traders focus on the market's overall direction without being distracted by intraday fluctuations.

Advantages:

  • Easy to read and understand.
  • Effective for spotting trends over time.

Disadvantages:

  • Limited information (only shows closing prices, no high, low, or opening prices).

Bar Chart

A bar chart offers more detailed data than a line chart, showing the opening, closing, high, and low prices for each time period (e.g., an hour or a day).


What It Shows:

  • Opening price (left horizontal line)
  • Closing price (right horizontal line)
  • High price (top of the bar)
  • Low price (bottom of the bar)

When to Use

  •  Ideal for traders seeking more information about market activity in a given time frame, helping to identify price ranges, volatility, and trends.

Advantages:

  • Shows more data points (open, close, high, low).
  • Good for spotting trends and market strength.

Disadvantages:

  • Can be more challenging to interpret for beginners.

Candlestick Chart 

One of the most popular charts in forex trading. Each candlestick shows the open, close, high, and low prices for a specific time period. The body of the candlestick is colored to show whether the price closed higher or lower than it opened.


What It Shows:

  • Open, close, high, and low prices for each period.
  • Bullish Candlestick (green/white): Close is higher than the open.
  • Bearish Candlestick (red/black): Close is lower than the open.
  • Wicks/Shadows represent the high and low prices.

When to Use:

  • Ideal for technical analysis and price action strategies. It provides visual cues on market sentiment, helping traders spot reversal and continuation patterns.

Advantages:

  • Detailed and easy to interpret once familiar with candlestick patterns.
  • Offers visual insights into market psychology and sentiment.
  • Helps identify patterns like dojis, hammers, and engulfing patterns.

Disadvantages:

  • Requires learning to interpret various candlestick patterns.

Renko Chart

A less common chart type that focuses solely on price movement rather than time. A new "brick" is added when the price moves by a set amount. If the price rises, a brick is drawn in one color; if it falls, it's drawn in another color.


What It Shows:

  • Pure price movement, ignoring time.

When to Use: 

  • Ideal for traders looking to filter out market noise and focus on significant price movements without time distractions.

Advantages:

  • Filters out market noise, emphasizing trends.
  • Good for identifying entry and exit points in trending markets.

Disadvantages:

  • Lacks time data, which may limit its use for some strategies.
  • Not widely used by beginners.
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Copyright © 2020 "POTAL PLATFORM". All Right Reserved

MEXN POTAL PLATFORM 

RISK DISCLOSURE: Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice. 

※ We do not provide services to residents of certain regions such as the United States, Canada, Israel and Iran.New Zealand, Australia, and North Korea, officially the Democratic People’s Republic of Korea or any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. 


Company address : RM 1506, 15/F GOLDEN GATE COMM BLDG, 136-138 AUSTIN RD, TST, KLN HONG KONG Registration number : 2475730│Tel : +852 6653 2060│ Email : support@mex-n.com Copyright © 2020 "MEXN POTAL PLATFORM". All Right Reserved