How Do I Read a Forex Trading Candle Chart?
A beginner traders guide to forex trading - how to read forex charts. The 3 types of forex charts are line chart, bar chart & candlestick chart - these oftenly used forex chart types are covered in this guides and beginner traders can learn how to interpret these charts from this tutorial.
This tutorial will show you how to read these candlesticks charts that are commonly used in the forex market.
How to Read Candlestick Charts for Beginner Traders
Line Charts - forex line charts plots a continuous line connecting closing prices of a currency pair.
Forex Line Charts - How to Read Candlestick Charts for Beginner Traders
Bars Charts - forex bar charts are displayed as sequence of OHCL bars. O H C L represents OPEN HIGH LOW and CLOSE. The Opening price is displayed as a horizontal dash on the left & closing price as a horizontal dash on the right.
Forex Bars Charts - How to Read Candlestick Charts for Beginner Traders
The main disadvantage of a bar charts is that it is not visually appealing, therefore most traders don't use them.
Candlesticks Charts - these candles charts use the same price data as bar charts (open, high, low, and close). However, they are displayed in a much more visually identifiable way which looks like a candlestick with wicks on both its ends.
How to Analyze Candles Charts
Rectangle section is called the body.
The high and low are described as shadows & plotted as poking lines.
Candlesticks Charts - How to Read Candlestick Charts for Beginner Traders
The color of the candlestick is either blue or red:
- (Blue or Green Color Candlesticks) - Prices moved up
- (Red Color Candlesticks) - Prices moved down
Most Forex trading platforms like the MT4 Platform, use colors to mark the direction of the price. Candlesticks colors used are blue or green: when price moves upwards, color of candlestick is blue: when price moves downward, color of candlestick is red.
Candlesticks Charts vs Bar Charts - How to Read Candlesticks Charts for Beginner Traders
When Forex candlesticks charts are used it is very easy to see if the price moved up or down as opposed to when bar charts are used.
