When it comes to forex trading, charts play a vital role in identifying market trends and making informed trading decisions. However, for a forex newbie, it can be overwhelming to navigate through the numerous chart types available. This article will explain which charts are best for a forex newby to trade.
Firstly, the most commonly used chart type is the candlestick chart. Candlestick charts display the price movement of a currency pair over a specified time period. Each candlestick represents a specific time frame, such as one minute, five minutes, or one hour. The candlestick consists of a body and two wicks, one at the top and one at the bottom.
The body of the candlestick represents the opening and closing price of the currency pair, while the wicks represent the high and low prices during that time frame. Candlestick charts are highly effective in identifying market trends and patterns, making them an ideal chart type for forex newbies to trade.
Another chart type to consider is the line chart. Unlike the candlestick chart, which displays the price movement of a currency pair over a specified time period, the line chart only displays the closing price. Line charts are useful in identifying long-term trends and patterns, making them ideal for traders who prefer to trade over longer time frames.
The bar chart is another commonly used chart type in forex trading. Similar to the candlestick chart, the bar chart displays the price movement of a currency pair over a specified time period. However, instead of candlesticks, the bar chart uses bars to represent the price movement.
Each bar represents a specific time frame and consists of four points: the opening price, the closing price, the high price, and the low price. Bar charts are highly effective in identifying market trends and patterns, making them an ideal chart type for forex newbies to trade.
Lastly, the Renko chart is an increasingly popular chart type among forex traders. The Renko chart displays the price movement of a currency pair in a unique way. Instead of using time as a basis for the chart, the Renko chart uses price movements.
Each brick on the Renko chart represents a specific price movement, such as 10 pips or 20 pips. When the price moves up or down by the specified amount, a new brick is added to the chart. Renko charts are highly effective in identifying long-term trends and patterns, making them an ideal chart type for forex newbies to trade.
In conclusion, the candlestick chart, line chart, bar chart, and Renko chart are all effective chart types for forex newbies to trade. Each chart type has its own advantages and disadvantages, and it is up to the trader to choose the one that suits their trading style and preferences. Ultimately, the key to successful forex trading is to understand the market and make informed decisions based on the available data.
