To any new customer to the field of forex trading, the major lesson to be learned is how to select the appropriate forex chart in an attempt to become a winning trader. The Forex charts are useful in tracking the movements of prices in the past and forecasting future trends. It is however easy to be overwhelmed with numerous choices of the chart to use since there are many chart types.
How to choose the best forex chart based on your trading style and goals
Why choosing the right forex chart matters
The selection of the appropriate forex charts can be very instrumental in the manner in which you read the market. Information is presented differently in different charts and each of them is advantageous. The wrong chart may be chosen which may complicate the identification of the trends, patterns, or key levels.
- Accuracy: The correct chart is easier to identify trends and patterns.
- Clarity: A chart that fits your trading style should enable you to quickly examine the information.
- Efficiency: The correct type of chart can make you make faster and better choices.
Types of forex charts
Forex chats can be of various types used by traders. What one is to select is based on your individual tastes, and which trading strategy you are pursuing. The following is a brief description of the essential types of charts:
- Candlestick charts: Most traders like them the most. Displays the open high, low and close prices in a graphical manner.
- Bar charts: The charts are price movements indicated in a vertical form. It is helpful to those who prefer to view price range information.
- Line charts: Simple and clean, with only closing values. Ideal for long term analysis.
How to select the best forex chart for your strategy
How to select the appropriate chart in your desired forex trading strategy. These are some of the factors to be taken into account:
- Trading style: Does the trader trade on a day to day basis or a long-term basis? The type of trading you do will guide you in the choice of the chart.
- Time frame: There are the short term charts that are applicable to the short term and long term charts that are better when the time involved is longer.
- Level of detail: Pay attention to the amount of information that you require to make your choices; some charts will give you more information than others will.
Choosing the best chart based on your trading style
Various traders like various types of charts according to their trading strategy. The way you will choose the appropriate chart according to your trading style is as follows:
For day traders:
- Select candlestick charts to analyze quickly and in detail.
- Find shorter time frame charts (e.g. 5min or 15min).
For swing traders:
- A bar chart would perhaps be better, being able to see the range of prices and giving sufficient detail.
- Take medium time frames (e.g. 1-hour or 4-hour).
For long term traders:
- Line charts are more helpful, since they are easy and set on the long term trends.
- The longer periods (daily or weekly) will assist in seeing the bigger picture.
Tips for beginners on choosing forex charts
To select the appropriate forex chart, these are some basic rules to follow should you be in the beginning of the journey:
- Start with candlestick charts: These are the most easy to use and are also beginner friendly.
- Experiment with different time frames: Try playing with time frames in order to have a better overview of the market.
- Use demo accounts: Trading in a demo account helps become familiar with various chart types and trading styles.
Conclusion
The skill of selecting the suitable forex chart is one of the essentials of every trader. Through your trading style, time and how detailed you want your chart to be, you can find the perfect chart to fit you. As you gain trade and experience, you are going to make informed trades.
