iCharts Discussions

[adamsmiths]

One of the most assuredly sure-shot ways of making money is to invest in the stock market. Going back to the age of the Medici family, it has traditionally been used for the purpose of making quick money. Rice trading mechanisms that go back hundreds of years, (Japanese candlesticks, for example) are making a swift comeback in the field of currency prices speculation. It’s also used quite commonly for the sake of commodity trading on particular foreign exchange trading platforms. Below are listed three of the greatest and most effective forex trading charts which are commonly used by traders of all kinds and preferences (Information Credit: www.cornertrader.ch ):

Line Charts: Speaking of charts, line charts are the first ones which spring to mind. In its simple form, the line chart shows a graph which joins one closing price with another, in an end-to-end manner. It usually consists of a series of peak-and-slope structures.

The Bar chart: This is far more complex in comparison to the line chart. Unlike the line chart, the opening and closing prices of the bar charts are displayed, along with a series of highs and lows. If you stare down at the bottom side, then you would spot the lowest amount of price which was traded for a particular time period. Conversely, the top of the bar is indicative of the highest price in the market. As for the bar itself, it is indicative of the currency’s pair trading range.

On the left side of the spectrum, you would be able to spot a horizontal hash which indicates the opening price. You can see one on the right horizontal side which is indicative of the point of closure. To correctly define the word “bar”, it represents a definite unit of time: an hour, a day or an entire week. Thus, when the word ‘bar’ moves in a forward fashion, one should ensure that one correctly knows the time frame where it is being referenced. “Bar charts” are also known by the term OHLC chart. On expanding this acronym, the letters stand for Open, High, Low and Close. “Open” is the horizontal line which is situated to the left, “Close” is the line on the right side of a vertical line. The positions ‘high’ and ‘low’ are the top and bottom ends of the line respectively.

Point and Figure Charts: The figure and point chart is not as widely known as the previous ones on this list. Nor it is used by investors on an average, but it has the distinction of being one of the earliest types of chart to be used by technical traders. This kind of chart is used for the purpose of reflecting the price movements. That is to say, the point and figure chart is not very concerned with the indication of time and volume in the process of points formulation. The point and figure chart serves to remove the insignificant price movements, since they pose the risk of misguiding the traders with respect to the price trends. These charts also try to neutralize the effect that time normally has on chart analysis.

In order to maximise your profits and minimise your losses, try these charts which are important to know about, while trading in the market.