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Forex Charts Introduction – Candlesticks

This article is about using candlestick forex charts to determine your trading actions.

Candlestick Forex Charts

In this market you need to have several available tools to make your trading easier.  The fast-paced nature of the market along with the available leverage prompts traders to go in and out of positions over a short time period.  An example of this is day traders who often enter several trades in a trading day and hold them for extremely short periods of time.

When you have to manage such small time periods, making use of technical analysis and charts are ideal.  It gives you the opportunity to view a massive amount of information quite quickly.  There are different types of charts you can make use of and the decision as to which one you use should be based on your timeframe and what you feel most comfortable with.

Candlestick Forex Charts

Most individuals are familiar with line charts and the candlestick chart may throw them off balance for a short while.  It is a popular chart for this trading market and offers you more information than the conventional line chart.

The candlestick is comprised of a thin vertical line which indicates the trading range of the period.  A wider bar on the vertical line shows the variance between the opening and the closing prices.

The candlestick line indicates the value of the currency upon opening, its high, its low and the closing price for that specific period.  There is a wide section which is termed the ‘real body’ which indicates the range between the opening and the closing price for that day.  If this real body section is coloured or black, it indicates that the closing price was lower than the opening price.  If it is empty, it indicates that the closing price was higher than the opening price.

Below and above the real body, you find what is called the ‘shadows’.  This is also referred to as the candle wicks.  The wicks indicate the low and high prices for the trading day.  If the top wick is short on a down day, it means that the opening on that day was close to the high of the day.  A short top wick on an up day means that the closing price was close to the high.  The look of the candlestick is determined by the opening, low, high and closing of the day.

Once you have worked with candlestick forex charts and used them, you will realise how much information is displayed on a single candlestick.  All it needs is a mere glance at the chart to determine the opening and closing rates of the currency, the highs and the lows, and whether it closed higher than its opening price.  A series of candlesticks provides you with even more information as it will indicate the current trend of the market.

There are many other charts you can make use of for your trading needs.  As you can see, the candlestick chart offers you a wealth of information and is easy to read.  By making use of candlesticks not only will you be able to see the prices for the day, but you can also determine the market trend.

 

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