Easy Ways To Read Charts In Forex Trading Market For Beginners To Make More Profits

                                                                     

                                                                         

                                                                                   technical-chart-forex

         









There are 3 most popular charts and it is essential to learn all about it. They are:

1) Line Chart

2) Bar Chart

3) Japanese Candle Sticks Chart

Before discussing about charts it's essential to get acquainted with two very important terms - Bull and Bear

BULL

When a Forex or Stock market rises rapidly with confidence and stability it is called a bullish market. When inflation and unemployment are low and the economical factors are positive, brokers, investors tend to invest more and more in the market. As a result, the market rises uniformly over a period of time till those factors remain positive.

When the bears are outnumbered by bulls a larger demand appears for currency and thus increasing its value. In a bullish market the traders tend to buy currencies for less and sell at higher rates thus making profit. These are the typical trends of a bullish market.


BEAR

On the contrary, there is another face of the market and this is called a bear market. In a bear trend the market just behaves in the opposite manner. There overall market situation remain far from positive. There are high rates of inflation and unemployment and the prices of common items tend to rise. These factors create a sense of insecurity among investors and brokers.

In a bearish market the traders attempt to make profit by just doing the opposite i.e. selling currencies at higher rate and again buying the same at lower rates thus making profit. A bearish market the charts and indicators appear in red.

When traders understand that markets will soon be bearish and the bull will soon be overpowered they sell short. The simple thing to understand in a bear market is that you borrow currency from the broker and when the currency price falls, the broker is paid back at the lower price making profits. Going short indicates sell and going long indicates buy.

Read two most important terms in forex - Going Long and Going Short

Line Chart


The most basic type of chart is Line Chart and is created by connecting several data points together with a line. This chart is quite capable of giving you a good idea of how the currency price changes over a given period of time frame and allows you to keep an accurate track record of historical closing prices.

                 

Bar Chart

The bar chart is used in technical analysis to indicate the highest price of a security or currency traded at during the day as well as the lowest price at the top and the bottom of the vertical line respectively. 

The closing price is usually displayed on the right side of the bar and the opening price is shown on the left side of the bar. A single bar as shown below represents one day of trading.

                    

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In the above figure it is clearly shown in a bullish market in blue (i) Opening price (ii) Closing price (iii) Highest price of the day and (iv) Lowest price of the day.

The same features are shown in a bearish market in red.

The chart shown below illustrates how the bar chart actually looks on the trading platform.

                 

      


Candlestick Chart

This chart almost looks like a bar chart but the major difference is the relationship between opening and closing prices.

A candlestick chart emphasizes more on the relationship between the closing price and the opening price of the same trading day.

                   

 

The above figure displays Opening price, Closing price, Highest price of the day and Lowest price of the day in both bearish(green) and bullish(red).

The figure shown below clearly illustrates how a candlestick chart looks on a real trading platform.

                    

The trend of the market may be analyzed in several ways or methods over a fixed period of time - say an hour, a day or days, weeks or months.

An analysis over a longer period of time can indicate more reliable data while ignoring minor accidental changes.

An analysis for a very short period of time actually shows the perfect time of entry and exit during day trading or very short period trading in both the stock or forex market.

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