#8: The Different Types of Forex Charts
There are many different types of chart out there...
There is no point in me sharing with you and discussing all the different types of charts.
Because most probably you will not use 99% of them.
So, I'm just going to share with you the three most popular ones.
And you can then decide which is the one that suits you best.
Different types of Forex chart
Here are the three most popular type of Forex chart:
- Line Chart
- Bar Chart
- Candlestick Chart
Let me explain…
The first one is what we call a line chart.
It simply looks like a line on your chart:
One thing to bear in mind is that the line chart uses the closing price only.
The bar chart takes into consideration the open, high, low, and close only:
The candlestick chart takes into consideration the open, high, low, and close, but it colors the body compared to the bar chart:
How to interpret different types of Forex chart
As I've mentioned, there are different types of chart that you can use.
Point and Figure, Kagi, Line chart, Renko, Baseline, Area, Hollow Candles, etc.
But I'm just going to share with you the three that I just mentioned:
You can change the settings whether you want to use the closing, opening, high or low price:
The line chart is usually very good to help you define a market condition whether is it in an uptrend or range.
Because it's usually very clear to cut out any clutter or the wicks flying around on your chart.
Simply put, the bottom of the bar is the low, the lowest price of the bar.
And the top of the bar is the high, the highest price of the bar.
The left thing that you see sticking out is basically the open.
The right thing that you see sticking out is the close.
Here’s what I mean:
So, this is how you see the open, high, low, and close.
One thing to bear in mind is that a bullish candle and a bearish candle, the open and the close are in opposite direction.
It basically confused me at the start when I was new to trading, but trust me…
It will make sense to you eventually.
Compared to a bar chart, the candle chart basically shows you the color of the body, showing you the momentum of the move.
The bar chart does show as well but it's not as obvious to the naked eye.
When you look at candle chart, the picture is more easily summarized.
The candlestick chart looks like this...
They have the open, high, low, and close:
Don't worry if you don't really know how to read a candlestick chart.
Because I have a free candlestick training course that you can check out here.
- Line chart takes into consideration only in the closing price.
- Bar chart has the open, high, low, close.
- Candlestick has the open, high, low, close but the body is colored.
You're probably wondering, "Hey, Rayner, which is the best type of chart I should use?"
To be honest, there really isn't a best type of chart.
I would say the line chart is good to help you define ranges or trends.
It's good to kind of like give you the direction, the general direction.
Whereas for a trader that wants to read the price action to better time their entries and exits, I would say, the candlestick chart is good.
The bar chart is fine as well.
But for me personally, I trade using candlestick chart.
But then again, it's just me. It's entirely up to you.