how to read charts
Line Chart | Bar Chart | Candlesticks Chart
If you decide to make technical analysis as the foundation of your trading decisions then you would need to know the price chart. It would certainly be beneficial for you if you fully understand the basic of price chart.
1. Chart Types
Type of charts available for analysis in Metatrader4 (MT4). You can choose between line, bar and candlesticks chart.
2. Time Frames
You can change the timeframe (or period of each bar) to suit your trading style, or to change to a longer or shorter-term view of historical price action for your analysis.
3. Trendline Tools
Use this tool to draw trend lines, parallel lines, horizontal lines, fibonacci retracements and much more
4. Time Axis
Time axis at the bottom shows how long and how far price has moved in a certain direction.
5. Price Axis
Price is shown on the right. A lower number corresponds to a lower price and vice versa.
6. Individual Bar/Candle
Each bar represents a period in time such as 1 minute, 1 hour, 1 day or 1 week. Thus for a “D1 or daily” time frame, each bar represents 1 day
Price Components
OHLC: (Open, High, Low, Close)
EXAMPLE: D1 (daily price chart)
OPEN: The opening price of that day. This price is only quoted once a day, at the beginning of the period.
HIGH: The highest price traded on the day. This price will move if new highs are quoted during the D1 period.
LOW: The lowest price traded on the day. This price will move if new lows are quoted during the D1 period.
CLOSE: This is the closing price of the day. This will show the most current price, therefore this will continually move with every new price quote. At the end of the period the close price is the last quote of D1.
Forex Charts
Knowledge of forex charts are very important and it involves analyzing charts (candlestick, bar or even line charts). MT4 provide an easy to use forex charting tools.
Forex charting on MT4 will help you make a better informed decision on when and where to buy or sell or even when not to trade.
Chart Types
There are 3 most common forms of price chart : Line Chart; Bar Chart and Candlestick Chart.
LINE CHART
- Simplest form of chart available
- Easier to see the general direction of price
- Only show "CLOSE" price of that period
BAR CHART
- Provides 4 information: Open, High, Low, Close (OHLC)
- Small line to the left is the OPEN price
- Small line to the right is the CLOSE price
- Highest point is the HIGH price
- Lowest point is the LOW price
CANDLESTICKS CHART
- A very popular chart among traders
- Shows same information as bar charts but with more visualisation
- A candle consists of a body and a shadow
- Body of candle contains OPEN and CLOSE price normally
- Shadow of candle contains HIGH and LOW price normally
- RED CANDLE = DOWN DAY
- GREEN CANDLE = UP DAY
