Forex charts and spreads weigh heavily on the return on your trading strategy (this can have a huge affect on your profit or loss). As a trader, you are solely interested in buying low and selling high. Wider Forex charts and spreads means buying higher and having to sell lower.
A half-pip lower spread does not necessarily sound like much, but it can easily mean the difference between a profitable trade and one that losses money. The tighter the spread is the better things are going to be for you.
Anyway, tight Forex charts and spreads are only meaningful when they pair up with good execution of a well laid out trading strategy.
Ttechnical and fundamental forex analysts use Forex charts. The technical analyst analyzes the “micro” movements, trying to match the actual occurrence with known patterns. The fundamental analyst on the other hand tries to find correlation between the trend seen on the chart and “macro” events occurring parallel to that like (political and other events).
Reading and understanding forex charts can be quite confusing for inexperienced traders. You can get most charts now online, as part of a subscription service, and they most often include frequent updates. Because technical analysis is such a popular method of forecasting and predicting movements in the forex market, there are many services available online. Also some Trading Platforms like Metatrader have inbuild chCharting Tools.
What are the major types of Forex Charts?
Point and Figure Charts are charts based on price without time. Unlike most investment charts, point and figure charts do not present a linear representation of time. Instead, they show trends in price. A rising stack of Xs represents increases, and a declining stack of Os represents decreases. This type of chart used to filter out non-significant price movements, and enable you (the trader) to determine critical support and resistance levels quickly.
Bar Charts show either three or four rates for each time unit selected. HLC-Bar Charts show the high (H), the low (L), the closing (C). OHLC-Bar Charts additionally show the opening rate for the period (O). This type of chart provides clearly visible information about trading prices range during the time period (per unit) selected.
Candlestick Charts are based on an ancient Japanese method. The chart represents prices at their opening, high, low, and closing rates, in a form of candles, for each time unit selected. The empty (transparent) candles show increase, while the dark (full) candles represent decrease in price. The length of the candle body shows the range between opening and closing, while the whole candle (including top and bottom wicks) show the whole range of trading prices for the selected time unit.
