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Forex charts : What are they and how to use them?

Forex (Foreign Exchange - FX) is a currency trading market. Here traders participate in buying, selling, exchanging and speculating of foreign currencies. Central banks, investment firms, brokers, investors from all over the globe take part in trading in the forex market where transactions worth more than a trillion dollars are processed every day making it the largest market in the world with regard to the total amount of cash traded.

One useful way of tracking the prices of currencies is Forex Charts. Currencies in the forex market are valued by comparing it with another currency, called the Currency Pair. The first currency of which is called Base Currency and the second one is referred to as Quote Currency. Traders involved in forex market perform in-depth analysis of forex charts and decide when is the right time to buy a currency and when is the good time to sell a currency so as to make a profit in the money market. Candlestick, Bar, and Line are the different types of charts that traders use to analyze their next move in forex trading.

Line

These are simple charts that consist of a line representing one closing price to the next closing price of a currency. It depicts a currency's movement over a certain period of time.

Bar

These charts are a little complex compared to line charts. Along with showing the opening and closing price of a currency it also shows the highest and lowest price for which the currency was traded. The entire bar depicts the range of price for which the currency pair was traded over a time period (an hour, a day etc.). Projection on the left side of the bar indicates the currency's opening price and that on the right indicates its closing price. They are also called as OHLC (Open, High, Low, Close) charts.

Candlestick

A better version of a bar chart, candlestick chart has a large block in the middle which specifies the opening and closing currency price range. If this block is filled, then it indicates that the currency pair closed at a price much lower than the price at which it opened. If it is hollow, then it is the other way round.
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