Type of charts
| Type of charts |
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| Wednesday, 24 September 2008 17:55 |
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There are three main types of charts that are utilized by traders. These are the line charts, bar charts, and candlestick charts. Analysts and traders rely on these charts for market movement, trends, and speculating. The first type of chart, the line chart, is described as a line drawn to indicate movement from one closing price to the next. This is used to track general movement of one currency over a period of time. Line charts are often difficult to use and traders dislike them because they lack information. However, many analysts prefer this type of market chart. Bar chats provide more information than line charts because they displace opening and closing prices. They also show highs and lows, which is a very useful indicator for traders. This type of chart is also known as the “OHLC” chart, which refers to the ‘open’, ‘high’, ‘low’, and the ‘close’ for a currency. Our last type of chart, the candlestick chart, is the most useful for traders because it shows the same information on a bar chart, but in a cleaner and easier to read display. This type of chart is preferred because it can be easily interpreted and beginners find it most useful. The chart contains candlestick patterns that use names and codes to identify particular movement, making the information easier to memorize. |