Charts Tutorial

Charts Tutorial

Traders and investors always look at charts when they make trading decisions, because those charts contain essential information about the behavior of prices. Here are some familiar types of charts that facilitate performance analysis.

Traders and investors always look at charts when they make trading decisions, because those charts contain essential information about the behavior of prices. Here are some familiar types of charts that facilitate performance analysis.

Line Chart

A line chart is simply a line graph connecting prices at different times.

Shown in Figure 1, examples of a daily chart and an intra-day chart:

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Figure 1. One-year line chart of daily prices for EUR/USD

Bar Chart

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Figure 2. Three-month bar chart of daily prices for EUR/USD.

Figure 2 shows an example of a bar chart, displaying the daily open, high, low and close prices of YAHOO. One can see that, compared with the line chart, the bar chart reveals more information about the prices.

Candlestick Chart

Candlestick charts are very popular in Asia. Essentially, they contain the same information as bar charts. Figures 3 shows an example of a candlestick chart:

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Figure 3. Three-Month candle stick chart of daily prices for EUR/USD

Reference Charts

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Figure 4. Daily price candlestick chart with Fast Stochastics for EUR/USD.

Besides price, many other indicators contain important sources of market information. The common practice is to plot prices together with other technical indicators, which will be discussed in detail in the next section. These accompanying graphs are called “Reference Charts.” Figure 4 shows a chart with Fast Stochastics.

“Risk Management.” FXtrek University. . Copyright © 2001-2007 FXtrek.com. 07 Novemeber 2007 http://www.fxtrek.com/UniversityEN/charts.asp.

FXtrek.com, Inc., established in April 2001, is a financial technology provider offering solutions for the foreign exchange market. FXtrek has intermingled a core group of information technology specialists with investment analysts, thereby creating a well-rounded effective team. FXtrek develops and delivers foreign exchange products to suit both individual and institutional clientele. The product suite focus is on forex charting. FXtrek relies on... More