Three Types of Forex Charts

With the constant shuffling of Forex exchange rates on any given day, there is no doubt that the trader has to keep a watch on the currency pairs that he is trading with in order to keep in touch with the latest trends. In being able to do so, the ability to formulate an effective trading strategy will have a big effect on your profit and loss margins.

Most experts suggest that the first step to successful investing in the Forex market is to be able to use the different types of Forex charts that can offer you handy information.

Here are three types of Forex Charts used by both amateur and experienced traders:

#1: The Candlestick Chart

This type of chart provides information such as the opening, closing, high and low rate with the length of the candle indicating the amount of time in the period. A black candle shows that the rate is decreasing whereas a clear candle shows that the rate is increasing. Most traders find these charts to be the most accurate while also providing this information in real time.

#2: Bar Charts

While the candlestick charts have been created by the Japanese, the concept of the Forex bar chart was created by the Americans for the Forex market. There is no difference, however, between the two charts, as they provide the same information with the only difference being that the user should select the time frame. Interestingly, if you do use trading software such as the eToro Forex software, you can easily download widgets to monitor Forex charts available with the latest information.

#3: Point and Figure Charts

The purpose of these charts is to measure the prices without time being used as a factor, unlike the aforementioned charts, thus providing the user with pricing trends.