The different types of a Forex chart and how to choose one correctly

Choosing the right Forex chart can be a daunting task to many traders, more so those who are new in the market, and therefore it is imperative that professionalism is observed in order to make the right choice. This difficulty has been mostly perpetuated by the differences that exist in a Forex chart as well as the variety in which an investor has to choose from. Each Forex chart comes with its own unique design and set of information.

The choice made of a Forex chart is therefore not only fundamentally pegged in your level of expertise in the market but also the kind of information that you would like to obtain and the types of charts. There are basically three main forms of charts that are used by traders in the currency market which in effect can be used to make the valuable analysis that is essential for all traders. These are:

Standard bar Forex chart
The candlestick Forex chart
Line Forex chart
Standard bar Forex chart

This is the simplest and most commonly used type of chart based on the ease in use. its simple nature also makes it quite easy to understand.

It contains a vertical bar with a single horizontal dash on its left side and another on its right side. The right dash represents the closing price for a specified period of time while the left dash indicating the opening price for a specified time frame.

In addition, the top of the bar represents the highest price for a particular time while the bottom bar represents the lowest price also for a specific time.

Despite their wide use, the candlestick and line charts are said to provide better visual and graphical representations of data than this standard Forex chart.

Candlestick Forex chart

These are the oldest forms of price analysis charts dating way back to the 1700s.

Their representation of information is almost similar to that of a Forex bar chart except that here, the representation of data is done in a more visually aesthetic way. This is what makes them very appealing to most of its users as there is a clear demarcation of different market trends.

It contains a rectangle-shaped colored area that represents the range between an opening and closing price based on a specific time frame. A darker representation of this is aid to normally signify that the closing price was lower than the opening price and the opposite of this represented by a lighter one.

Line Forex chart

This is mostly used by media organizations in order to represent cumulative trends and movements in the market. They can be compounded at the end of the day, week, month, year or even years.

Their usage is best in showing long-duration trends and that makes them very efficient to those looking for summative statistics and information.

However, the Forex line chart does not give very detailed information like its counterparts. This is because they only show one price be it open high, low or close. The choice of the one to use among the four prices entirely lies on your hands.

As a conclusion, your choice of a Forex chart should best suit the needs that you target to meet. However, normal traders are mostly implored to use the candlestick type as they are easy to interpret and save them much time.

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