The Forex market is the most liquid trading market in the world, and that also makes it the most dynamic market. Traders regularly make and lose tons of money in this market and for the most part, many new entrants find it highly confusing and overwhelming. As a trader in the Forex market, knowing current events as they unfold, and trends as they form, is crucial to your strategy and trading plan. This is where live Forex charts come in.
Forex charts essentially provide a trader with a view of what’s happening to his chosen currency pairs by the minute, or hour or week. Charted over different time intervals like every minute, every hour or every day, currency charts provide a trader with a clear view as to where prices are going. When used judiciously with technical analysis, good software and common sense a trader can learn to interpret charts to his advantage, and possibly make profits or at least, avoid losses.
Charts come in two types: Ones that show you movements within time frames (minute, day or week), which are not exactly live, but provide information to swing traders or investors nonetheless. Other charts show price movement as they occur in real time. These are used by day traders who enter and exit multiple trades within a day and use time-sensitive trading strategies.
Forex charts also differ in terms of how much information they provide. Line charts are the most simple and uncluttered, and preferred by rookie traders. They show the closing prices of currency over specific time intervals (generally longer intervals like days or weeks) and are also extremely useful for identifying price support and resistance points. Line charts are best for those who prefer simple and straightforward trading.
A bar chart is slightly more complicated, but offers more information to work with. This chart displays the highest and lowest price of a currency at given time intervals by means of a vertical bar. The top-most point of the bar shows the highest price and the bottom, the lowest price that the currency commanded during that interval. Additionally, bar charts also display the opening and closing prices with ticks on the left and right side of each bar respectively. Bar charts are usually used for medium time durations – like an hour or these days, even 30 minutes or less.
The most complex and in-depth of all charts is the candlestick chart. The tell you the highs, lows, opening and closing prices as well as indicate whether prices are rising or falling. Instead of a bar, you have a candlestick, with wicks at each end, denoting highs and lows. Candlesticks also indicate whether a market is bearish or bullish by solid or transparent candles respectively. Candlestick charts are quite comprehensive in this way, providing a seasoned trader with as much information as possible, making it easy to spot trends.
When used along with indicators like RSI, MACD or Stochastics, live Forex charts can provide a wealth of information and insight to a trader, without which it would be impossible to survive profitably in the Forex market.