The Meaning Of Forex Price Charts And How To Use Them
By Adrian Pablo, Thu Dec 8th

There is one very important factor that you should considerwith great care if you are willing to become a successful,profitable trader. This ever important factor that must bealways present in the trader’s portfolio, is the ability to readthe charts. The beauty of charts, as opposed to chartsused for, say, daytrading stocks, is that they are pretty easyto interpret and use. They're a reflection of a slower-moving,stable economy (the one of a country) compared to the future anddaily drama of company reports, Wall street analysts andshareholder demands. And, unlike stocks, currency charts rarelyspend much time in tight trading ranges and have the tendency todevelop strong trends (even though the FX market may bevolatile, it's more predictable). And, rather than tens ofthousands of stocks to analyze, you only have a few mayorcurrencies to trade. The most common types of price bars, usedin trading, are the Bar Chart and the Candlestick chart:Bars Charts - Price bars are a linear representation (a line)ofa period of time. This enables the viewer to see a graphicrepresentation summarizing the activity of a specific timeframe. For example they can be one minute or five-minute timeintervals depending on the system you are using. Each bar hassimilar characteristics and tells the viewer several importantpieces of information. First, the highest point of the barrepresents the highest price that was achieved during that timeperiod. The lowest point of the bar represents the lowest priceduring the same period. Regular bars display a small dot on theleft side of the bar which represents the opening price of theperiod and the small dot on the right side represents theclosing price of



the period. Candlesticks - JapaneseCandlesticks, or simply Candlesticks as they are now known, areused to represent the same information as Price bars. The onlydifference is that the difference between the open and closeform the body of a box which is displayed with a color inside. Ared color means that the close was lower than the open, and theblue color represents that the close was higher than the open.If the box has a line going up from the box it represents thehigh and is called the wick. If the box has a line going downfrom the box, it represents the low and is called the tail. Manyinterpretations can be made from these "candlesticks" and manybooks have been written on the art of interpreting these bars (Visit: http:www.1-forex.com). So, themain thing to keep in mind between the two types of price chartsis this: Candlestick charts are similar to bar charts in thatthe top tip of a vertical line represents the high and bottomtip represents the low. However, market activity between theOPEN and the CLOSE is represented differently by the use ofcandlestick bodies. Because of their colored bodies, candlesprovide greater visual detail in their chart patterns than barcharts. Which is why many experts recommend you becomeintimately familiar with Candlestick charts.

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About the author:Freelance writer with articles published in a number of places.You can learn more about trading and its great advantagesover other kind of business at this useful website: http:www.1-forex.com).