Chart Forex Trading represents the market through fluctuations in exchange rates from the present time to the past. Looking at the chart, you can more clearly observe the change in exchange rates during each specific time. Accompany Learn Forex Trading through the following article to learn how to read information from candlestick patterns and how to use basic charts to analyze the Forex market.
There are three types of Chart Forex Trading for you to choose from. However, usually, the candlestick chart is the popular type that is preferred.
Trading chart in bar form
Bar charts represent information about a security’s value through a series of bars. Each bar represents price fluctuations over a specific time. Each bar has a vertical line representing the highest and lowest prices reached during that period. The opening price is denoted by a horizontal line to the left of the line. The closing price is denoted on the right.
If the closing price is above the opening price, the bar can be marked black or green. Conversely, if the price decreased during that period, the bar may be red. This colorization helps encode information about price trends and fluctuations.
A large gap between the opening and closing prices represents a significant change. If the closing price exceeds the opening price, it is a positive sign. Indicates positivity on the part of the buyer. Conversely, if the closing price is close to the opening price, it may indicate stability and little volatility in the stock price.
See more: What you need to know about the gold price chart
Forex chart in straight-line form
Line chart, called Line chart in English. Is an effective visual means of showing price fluctuations and trading volume as a continuous line.
Line charts are often popular in new stock markets. A place where transactions take place in a short time. Regularly match orders each session or multiple times in one session. It gives a clear view of the price journey of a security over a particular time.
- Clarity: Line charts help investors focus on key support and resistance levels. Provide enough information to easily identify trends.
- Ease of use: Suitable for teaching basic chart reading skills before moving on to more complex techniques. Concepts like volume and moving averages can be easily applied to line charts. Help learners continue their journey to improve their skills.
Despite certain disadvantages, line charts are still useful tools for understanding price behavior. At the same time, it is a good start for beginners in forex trading.
Candlestick Chart Forex Trading
Candlestick chart, or Candlestick Chart. Is a tool that describes price fluctuations in asset markets. Specifically through the shapes of the candles. By observing candlestick charts, investors can evaluate the trend (up, down, or sideways) and the level of price fluctuations.
- Shadow: The portion remaining after removing the candle body. Shows the difference between the opening price and closing price.
- Opening price: The first trading price when the new candle forms.
- High Price: The top of the upper candle shadow. Shows the highest price during the candle’s formation.
- Low Price: The bottom of the lower candle shadow. Shows the lowest price during the candle’s formation.
- Close Price: The last price traded when the candle is completed.
The color of the candle often represents price direction, with blue/black usually implying a price increase (closing price > opening price), and red/white implying a price decrease (opening price > closing price).
Candlestick charts not only provide a special insight into market trends but also reflect three main forms of market volatility: uptrend, downtrend, and sideways.
Method of converting candlestick Chart Forex Trading display
There are many methods of converting candlestick chart displays. Below we will list the two most basic and popular methods.
Chart forex on PC
If you are using the PC version of MT4 or MT5, you can easily select the type of Chart Forex Trading you want to display (such as candlestick charts). Then, simply click the candle icon on the screen to convert the chart to candlestick form and display the information conveniently.
To switch to candlestick charts on the MT4/MT5 mobile app. You just need to touch the chart screen. Then navigate to Settings. Next, tap the candlestick chart on the chart embed screen to change its appearance. Convert chart to candlestick format.
Method of reading trading charts
Below is a guide to reading forex charts. Let’s see how to read for more convenience in trading.
How to read the entire forex charts
On the chart, the vertical axis represents exchange rates (prices), and the horizontal axis represents time. The right side shows the current exchange price. At the top left of the chart frame, you can check the name of the currency pair (product) and the timeframe that has been selected. For example, M15 represents 15 minutes.
Price positions are arranged below, and prices are expressed in the order “low price, high price, open price, close price”. The latest price does not affect the closing price, so only the price on the right is always displayed. If prices are arranged as rows, they are displayed in the order “Low, High, Open, Close”. Since the closing price of the latest price has not been determined, only the price on the right is displayed.
The time frame notation is explained as follows:
- M1: 1 minute
- M5: 5 minutes
- M15: 15 minutes
- M30: 30 minutes
- H1: 1 hour
- H4: 4 hours
- D1: 1 day
- W1: 1 week
- MN: 1 month
Method of reading candlestick trading charts
Named “candles” because they are shaped like a candle lit by fire. Candles were created by merchant Munehisa Homma during the Edo period. First applied in transactions at Dojima rice market in Osaka.
Candles represent 4 types of prices, including “Open price, close price, high price, and low price”. Represented by bar graphics. A positive line represents a price increase, while a negative line represents a price decrease. The length of candlesticks is displayed based on a set time unit (called a timeframe). For example, when choosing to display in a time frame of 1 hour. Each candle represents 1 hour. If 15 minutes is selected, each candlestick will represent 15 minutes.
See more: Instructions for registering an XM account correctly
Predict trading by analyzing Chart Forex Trading
When just displaying charts without using analytical tools, predicting when to buy or sell becomes difficult. To evaluate buying and selling decisions, integrating an analytical tool called an indicator into the chart becomes important.
The prediction of buying and selling through an index is called “technical analysis.” In charts that do not display any information like the one below, determining when to buy or sell becomes difficult.
You can display not just one indicator but many different indicators on the chart. Here is an example with a moving average displayed with multiple configurations (periods):
- “Dead Cross”: Becomes the benchmark to sell when the long-term moving average crosses below the short-term moving average.
- “Golden Cross”: Becomes the benchmark to buy when the long-term moving average crosses above the short-term moving average.
Epilogue
As mentioned earlier, a basLearn Forex Trading method is to use technical analysis, displaying multiple indicators on Chart Forex Trading, to achieve profits through comprehensive prediction of buying and selling decisions. sell. Learn Forex Trading hopes that the above information will give investors the necessary knowledge to succeed on the road ahead.
Questions related to forex trading charts
Why does using indicators on charts make trading decisions easier?
Using indicators on charts helps clarify price trends and movements, making buying and selling decisions easier by providing comprehensive information and supporting technical analysis.
Difference between “Dead Cross” and “Golden Cross” when applying moving average?
A “Dead Cross” occurs when a long-term moving average crosses below a short-term moving average, often seen as a selling point. Conversely, a “Golden Cross” is when the long-term moving average crosses above the short-term moving average, typically a buying point.
Why is displaying multiple indicators on the chart important in trading?
Displaying multiple indicators on the chart enhances analysis and decision-making capabilities, helping investors have an overview and detail of price fluctuations, thereby optimizing the prediction and decision-making process. intend to buy and sell.
