The forex market is the most liquid and active market in the world. At every single second an enormous amount of transactions gets executed, with the total daily turnover being regularly estimated to reach trillions of dollars. If we did not make use of an analytical tool such as a forex chart to place the data into a more compact form where it can be visually examined and analyzed,
we would be in possession of a vast sea of difficult to interpret numbers. The forex trading chart, then, is a visual aid that makes the recognization of trends, and patterns in general easier, and makes the application of technical tools of analysis at all possible. Charts are categorized according to the way price action is depicted as well as the time frame of the period being examined. Imagine that we have 4-hourly candlestick chart of the eurusd pair.
This means that each candlestick on the graph presents the price data of a four-hour long period in a compact form. What happens inside that time period is irrelevant. If we had chosen an hourly chart, each candlestick on the chart above would be replaced by four different candlesticks.
There are many ways of depicting the price action on a forex trading chart. Bar charts, candlestick charts, line forex trading charts are a few of the many options available, with each offering its own advantages in some aspect of analysis and utility. But they all do the same thing: they plot the prices of a day (or some mathematical manipulation of the price data) to the time series on the horizontal axis which is then used by traders to evaluate and understand the market action for the purpose of making a profit.
Forex charts are an important part of your trading strategy. Find reviews and ratings of the best charts here. Esignal is an easy to use forex charting tool that contains many”common features along with”an unique aesthetic graphical interface.
Source by kevin blake