Well the tile might be a little misleading – there are no pie charts in forex, however analytics are a big part of your daily trading routine. At XTrade Europe Academy, daily reports offer a detailed analysis of price points over the course of a 24-hour trading period. The activity is displayed in the form of “Japanese candlesticks” (More info further down) to give you highs, lows and current price levels which you can use for your own trading strategy as well as an explanation of the activity. XTrade Europe and other online trading platforms should offer out these reports twice a day.
Compared to traditional bar charts, many traders consider candlestick charts more visually appealing and easier to read. Each candlestick provides an easy-to-decipher image of price action. A trader can compare the relationship between the open and close as well as the high and low. The relationship between the open and close is considered vital information and forms the essence of candlesticks. Hollow candlesticks, where the close is greater than the open, indicate buying pressure. Filled candlesticks, where the close is less than the open, indicate selling pressure. All major trading platforms such as XTrade Europe should provide up to date charts for you to utilize.
There is a lot more to learn about reading this sort of chart. Although easy to read, it will take some practice before you can properly analyze them.
A bar chart or bar graph is a chart that presents grouped data with rectangular bars with lengths proportional to the values that they represent. The bars can be plotted vertically or horizontally. A vertical bar chart is sometimes called a Line graph.
While bringing you the same information as the candlestick charting technique, the bar chart stays on the blander side. The Bar chart clearly displays the open and the close as well as the high and low but lacks the color. Some traders who feel the high / low information is key but doesn’t want the color coding bias stick with the bar chart to find simple patterns they can trade.
Traders often look at bar charts to observe range comparisons. If a bar’s range is completely inside a previous bar or completely outside the previous bar, then you can be at a spot of indecision that can precede big moves.
A simple line chart draws a line from one closing price to the next closing price. When strung together with a line, we can see the general price movement of a currency pair over a period of time. Line charts provide the least amount of data however; this isn’t necessarily a bad thing. Many traders believe the close is the most important price of the day and that is where the line chart shines. The simplicity of line charts is especially prevalent in well-defined trends.
Which type of chart is best for you?
Charts are the starting point of any technical or price action based trader. A price chart is nothing more than a graphical display of price over a fixed amount of time. However, the charts help a trader ask the market about the market so that a trend is clear or trade opportunity can become clear. There a commonly 4 types of chart: Monthly, Weekly, Daily and intradaily. The monthly and weekly I won’t go into here, because they are not necessary for daily forex traders. I will begin with the most common, daily charts.
At XTrade Europe, daily charts represent the price action of a market based on one-day intervals. Daily charts are perhaps the most commonly used chart by traders and investors. These are handy in analyzing the short to intermediate-term time periods, however, many traders use the daily charts for long-term analysis as well. As a rule of thumb, daily charts are commonly used to analyze periods in excess of six weeks.
In addition to the Daily charts, Intraday charts are also extremely popular in the trading community. Intraday charts illustrate the price movement of a market within the confines of the daily opening and closing bells of the markets.
In successful trading, one thing is certain – learn to use charts to analyze the market and you will find that forex trading isn’t just a guessing game.