Different ways of displaying price data
There are three main ways to display price data on your charts and we are going to take a look at all three here. Starting with probably the simplest of the line charts;
The line chart
The line chart displays it’s price data by plotting a series of points at the close of each trading day and then drawing a line between them. When we say "close of day", there is no real close as the forex market is open 24 hours but it is market practice to treat the day as moving from Asian open to New York close, generally considered to be at 10pm GMT (5pm EST.)
Although the line chart is so simple it may not be the best for the looking at the shorter time frames, some traders like to use them when it comes to looking at the longer term perspective because they don't show a lot of the weekly noise in the market. They are also great for spotting trends in the market.
The bar chart
The line chart above gave only the closing price data for a time period, the bar chart below is different in it displays the open as well as the close for the time period. It also shows the high and low for that same time period. The small horizontal line to the left on each bar is the opening price. The small horizontal line to the right on each bar is the closing price. The extremes of the vertical bar show the high and low for that time period.
This choice of displaying price data on charts has become the favourite for many traders as they have become more focused on trading the shorter time frames, where a tighter stop can be used. If using this method of trading it is important to know the high and low of your time frame, not just the closing price that the line chart gives.
The candle stick chart
The last of the three here is the candle stick chart which has seen a resurgence since the 1990's. It is the one we use to trade with and therefore you will see the most of here at 2beanonlinetrader.
As with the bar chart the candle sticks display the open, close, high and low of a time period but with the difference that the "body" of the bars closed in. The "body" represents the difference between the open and close of price for that time period. The extremes of the candle are referred to as the "wick" or "shadow", are again the high and low traded for that time period.
In the candle stick chart below we have candles that are green and candles that are red. The green ones (which traditionally would be white) are showing that the day closed up on its opening. The red ones (which traditionally would be black) are showing that the day closed down on its opening. If you are trading the shorter time periods then the same would apply, the candles would be green and red when closing up or down at the close of the hour, 15mins candles and so on.
All the charts on this page are the EURUSD,daily
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