5 Most Common Types of Trading Charts Explained
Area chart, japanese candlesticks bars and haiken ashi candles are some of the most common types of trading charts and chart patterns used in forex and stock market. All of these chart patterns show us the changes in asset prices, but they do it in different ways each with its own characteristics.
1) Area Chart
an area chart is so cold because it connects the price values over a certain period of time with a line the period of time is called a time frame
2) Japanese Candlesticks Chart
you’ll see a series of red and green rectangles of different sizes with thin lines above and below these rectangles are called the body of the candle and the thin lines are called the wicks or shadows a green candlestick means that the price is going up while a red one means that the price is going down. the size of the rectangle shows us how much the price has changed over the selected time frame. the upper wick is the maximum price of the asset over the selected time frame and the lower wick is the minimum price.
3) Bar Chart
a bar chart is very similar to japanese candlesticks displayed as a series of red and green lines with dashes to the left and right. the top and bottom of the line are the highest and lowest prices for the selected time frame. the horizontal line on the left shows the opening price and the horizontal line on the right shows the closing price. the green and red colors also show the rise or fall of the price.
4) Haiken Ashi Candle
this is a special type of candlestick that visually differs from the japanese candlestick chart. haikin ashi smooths out the graph and makes it clearer. it allows you to see the market situation more accurately. its advantage is that it clearly demonstrates market trends a trend on the chart is the direction of an assets price movement. if the price is growing, the chart is moving up then the trend is upward or bullish. if it falls, the chart goes down.
5) Downtrend Or Bearish
when the price does not rise or fall and its changes are insignificant, it means that the trend is sideways or flat. the ability to notice and analyse the market’s trend is essential in order to trade profitably. if the trend is upward then it becomes dangerous to open down trades and if the trend is downward buy trains are not recommended.
It’s better to refrain from trading against the main trend if the chart is flat then you can make short-term trades on small price changes however just finding a trend is not enough to trade successfully. It is therefor advised to learn how to find accurate signals for opening profitable traits.
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