Trading Manual part 11: Trading Charts

Different Forex Charts

Within the Forex market, there are multiple chart forms. However, 3 of them are taking the lead. In this course we will go in depth on: Line chats, Bar charts and the main Candlestick charts. In our trading style, we basically only use the candlestick charts, as they give us the most data. Their information is the most accurate and comprehensive.

Line charts

The line charts are basically the simplest ones. They are an extremely simplified image of the price action. It basically shows you the overall trend of a certain asset.
On this chart form, support and resistance levels can be drawn; but that’s basically all as they won’t give you any more information. You can’t trade from the line charts as it doesn’t give you the essential information as the opening and closing price from a certain period of time. The line goes from high to high, low to low, open to open or close to close.

We basically see the closing price as the most important one. Based on the closing price, we can determine who won the battle (bulls or bears). Below you can find an example of a line chart. You can see some key levels where the price has bounced off. This is why line charts can be useful sometimes when drawing support and resistance levels.

line chart

Bar charts

The bar chart gives a more detailed look on the price action, when we compare it with the line chart. The bar chart shows a bar for all price action in the period of time you chose. So for example, you selected the 1-hour timeframe, every bar will represent the price action over the 1 hour you’ve selected. When you selecting higher timeframes, you are basically zooming out to get the overall price action. And vice versa of course.

So, what actually does a bar shows you? Every bar will show you 4 parts of essential information. This information can help you as a confluence for entering a trade, or as a confluence for certainly not entering a trade. The bar gives you an opening price, a closing price, a high price and a low price. Every bar sticks to an independent period of time, there is absolutely no connection between the bars.

Below you can find an example of a bar chart. You can see the high, low, open and close price are indicated on the chart picture from ORN

Candlestick charts

Candlestick charts are the most common in nowadays trading, you will be using candlestick charts as your main chart form. They simply give you the most accurate view on the price action. The candlestick charts basically give you the exact same information as the bar charts do. However, the candlestick charts make you visualise the price action more easy!

As mentioned before, candlestick charts are the most popular in nowadays trading. On the right we’ve placed a screenshot of what a chart looks like on the analysing platform we will be using throughout your trading journey.

Try different strategies using these charts. Also check out our strategies page: Forex and CFD strategies

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