Types of charts

There are 3 main types of charts on the platform. You can switch between them by clicking on the icons in the “Charts” toolbar.

Let’s see how these types of charts are different.

Line chart

This is the simplest of all chart types. It is constructed by joining the closing price of each period, for example, daily closes for the daily line chart or weekly closes for the weekly chart. The fact that a line chart uses only closing prices means that it eliminates some of the market noise (i.e. unimportant price movements) and allows the trader to focus on key changes in price. This type of chart might be easier for beginner traders to understand. The line chart allows traders to identify important support and resistance levels, trends, and certain chart patterns. On the downside, the trader might want more information about prices than a line chart can provide. Sometimes it is necessary to know not only the closing price, but also the opening, maximum and minimum price levels. Another drawback of a line chart is that it does not show empty spaces. There are other types of charts (bars and candles) that will help you with that.

Bar chart

Bar charts show the price range over a certain period of time. A bar is a vertical line that connects the high and low of a price over a period of time. The horizontal lines mark the opening price (left) of that specific trading period and the closing price (right). On the weekly chart, each bar represents 1 week. On the H1 chart, each bar shows the extent of price action over 1 hour.

Different colors can be used to identify bars that closed at a higher price than they opened (bullish bars) or at a lower price than they opened (bearish bars). In the example below, the bullish bars are green and the bearish bars are red.

By looking at a bar chart, the trader can quickly form an idea about what has happened to the price at particular times and time periods. This is very convenient for market analysis.

Candle Charts

Candlestick charts provide traders with the same information as bar charts, but the candle bodies are given dimension and filled with color (candles are usually green/white if the price has increased during that period of time or red/black if the price has decreased). This type of graphics is originally from Japan. It is said to have been invented in the 18th century by a rice merchant named Munehisa Homma. The lines extending up and down from the bodies of candles are called wicks or shadows. The top of the top wick indicates the highest price over a period of time, while the bottom of the bottom wick shows the lowest price level over a period of time. If a candle has a wick that is large compared to its body size, it is a sign of a possible reversal point in the market. Experienced traders can gain a lot of information about market psychology from a candlestick chart. Most traders agree that candles are visually easier to read than bars, although there are still those who prefer bars to candles.

What type of graph is best? The answer to this question is particular for each trader. It also depends on the objectives you have in our market analysis. The line chart can be a great tool for quick trend recognition. At the same time, a candlestick chart looks more visually informative and is generally the most popular chart type among forex traders.