Forex trading is a complex system of figures and traders need a strong understanding of how the markets work as well as a lot of confidence. However there are a number of tools such as forex charts which traders use to help them analyse and understand market trends. By using a forex chart a trader can also see the price fluctuations in currencies and enter, exit or wait out their bid depending on what will give them the best advantage. We take a closer look at the characteristics of forex charting and how traders can use it to their advantage.
Types
First we will look at the different types of forex charts that traders use. Price charts are the most basic type of chart and are an important tool when it comes to analysing the movement of the market. Price charts are the most basic form of forex charts. They are an important tool for technical analysis and can be used for smart investment decisions. Some of the most popular forms of price charts are:
Line chart
– Fluctuations in price are shown by the movement of a line.
Candlestick chart
– Many traders believe this to be the most accurate type of chart which indicates real time changes. Bulls are shown by the green bars and the bears are shown by the red ones.
Bar chart
– The US version of the candlestick chart.
Heikin-Ashi chart
– Similar to the candlestick chart but requires more sophisticated calculations to analyse trends.
Renko chart
– This chart only notes fluctuations in price and not time or volume quotients.
Check the Time and Time Frame
Many versions of forex charting software will show a number of charts with different time frames. It is essential that you are analysing the chart with the relevant time frame otherwise you risk making a poor decision based on “old” data. It is a good idea to set up your program in a specific layout and then save this as a template or default setting to make things easier for yourself.
It is also important to make sure that you are looking at the right time for your trades. The forex markets are open at different times so you may need to reset the displayed time on the live forex charts to coincide with your region. The markets are open at the following times at EST:
New York 8am-5pm
Tokyo 7pm-4am
Sydney 5pm-2am
London 3am-12noon
While forex charts can give you a fantastic edge when it comes to analysing the markets they are not the only thing you should consider when trading. If you are looking for forex charts a simple online search should return several versions available for free.
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