Each of the traders must know how to read a Forex chart, regardless of whether he considers himself a "chartist", whether he uses technical analysis, and so on. This is due to the fact that the classic methods of graphical analysis, which are not at all difficult to master, provide solid advantages in trading, allowing you to confidently increase your deposit step by step.

Below are the main principles that will help you understand how to read Forex charts correctly. With their help, it will be easier for beginners to get comfortable, allowing you to bypass many of the pitfalls that traders' hopes are broken on.

A basic level of

Before continuing, you need to remember that the main instruments of Forex trading are currency pairs. For example, GBP/USD. The currency pair is written in the form of a ratio, which means that the value of the 1st, that is, the pound, is divided by the price of the second, in this case, the dollar. Accordingly, if its rate is 1.4000, then the trader understands that for 1 pound you need to pay 1.4 US dollars.

Thus, the purchase of GBP/USD with the 1st trading lot will mean that the trader bought 100 thousand pounds sterling, paying for them in US dollars. On the price chart, an increase will mean that more dollars are needed to buy the pound and, conversely, a fall will indicate a depreciation of the UK currency, but only against the US dollar. These are the simplest basics, and now let's move on to the main principles and learn how to read Forex asset charts.

Where is the profit coming from

The first principle will be useful for beginners, experienced traders can skip it. Each currency speculator should understand that when buying a currency pair, he expects it to grow on the price chart, which will allow him to receive his income from Forex trading. That is, in this case, the trader needs the strengthening of the first currency in the pair in relation to the second.

If a trader concludes a short deal, that is, sells a currency pair, then he expects the first currency to fall in price to the second, which is displayed on the Forex chart as a decrease in prices.

Period

Before you read Forex charts correctly, you need to understand the meaning of time intervals or timeframes, commensurate them with the conditions for entering a trade. Many beginners do not take into account the fact that each strategy provides for working with a certain time period of the chart, in which it will show the best result. But, what is even more common, the trading system can combine work with several Forex charts. For example, a chart with a 4-hour timeframe can be used to determine a general trend or search for certain formations, while a direct search for an entry point will occur on a chart with a 5-minute time frame.

If this approach is used, then each indicator can be separately configured so that it is displayed with the appropriate parameters strictly on the timeframe selected for it. To do this, when adding an indicator, you need to input parameters uncheck those time intervals where the indicator should not be displayed on the price chart.

Price on the chart

Next, you need to remember that at each moment of time all assets have two Forex prices, we read the charts correctly and take into account that there is a bid and an ask (ask), that is, the offer and demand prices. For example, for a pound now the offer price is 1.4002, and the ask price is 1.4000. That is, if a trader wants to sell on the market, he can do it at a higher price - at 1.4002. If he wants to buy, then at a cheaper price - 1.4000. The difference between these prices in points is the spread, which can be fixed or floating. In the latter case, the price between supply and demand can vary greatly, and sometimes this difference reaches tens of points. Naturally, in this case, the trader should clearly see both prices on the chart in order to understand under what conditions he will make a deal.

Time in the terminal

To read a Forex chart and understand what it shows, you must also take into account the time that the terminal displays. To do this, go to the pages brokerage company, which has an open account, and clarify this point or pay attention to the time at the bottom of the chart and compare it with your own. This is important, since the daily candle for different brokers may differ in view of the time at which it will close.

It also matters when posting. economic indicators. You should always carefully check what time zone you are in, and for which of them the news release display time is configured. Since many beginners simply focus on the time in the terminal, sometimes they miss important news, wait for them at the wrong time, or then track the market reaction to them on the Forex chart at a different time than they actually came out.

Trend detection

Finishing the topic on how to read Forex charts, you should pay attention to the fundamental rule of determining the trend, which passes by most beginners who prefer to focus on inaccurate indicators. Each successful trader when looking at the chart, he immediately sees whether there is a trend there, whether it is ready to last, and how strong it is. To do this, take the last 2 minimum or maximum, visible to the naked eye. If they consistently rise, then the trend is up; if they go down, then it is down. If none of the conditions is met, then we can confidently assume that prices are moving sideways, after which the trend may continue or change.

• 
• 

The basis of all the basics for making a forecast on the stock exchange is the price chart. With it, you can find out who is in this moment stronger, buyers or sellers. Various combinations and chart movements make it possible to predict the most likely price behavior in the future, which provides a great chance to make money!

Reading a stock chart is a basic and necessary skill that is needed for good market analysis and successful trading in the future. As in reading, in order to read a book, you need to know the letters, so in trading, in order to learn how to read stock charts, you need to know the basics. Let's talk about them in this article. Price chart or chart ( from English. price chart), displays the price change for financial instrument over time. This allows you to visually assess the dynamics of movement and make a forecast.

Graphs are different types, but we will focus on the most popular ones that traders use and which are in every trading terminal.

The main types of price chart display:

1. line chart
2. Japanese candles

line graph

Displaying the price in the form of a line chart is the simplest thing you can think of. It looks like this:

Linear display of the price chart

The timeline is displayed at the bottom, and the price is displayed vertically on the right. The line chart is based on closing data each period ( the period will be clearer when parsing a chart in the form of Japanese candlesticks).

This method of displaying prices was invented in Japan in the 17th century by traders in the rice exchange, and has since become widely known throughout the world. The chart in the form of Japanese candlesticks is perhaps the most popular, informative and convenient for trading. It looks like this:

Thanks to each candle, you can find out such price parameters as:

1. opening price
2. closing price
3. minimum price per unit of time
4. maximum price per unit of time

Each candle represents a price fluctuation for one time period that the trader chooses. Those. one candle, for example, can display all price movements within 5 minutes, an hour, a day, etc.

As one period passes, for example, an hour, so the next candle begins to form, the formation of which will also take one hour. The time period (timeframe) is set by the trader in the settings of the exchange terminal.

Schematic representation of Japanese candlesticks

All parameters of candles have their generally accepted designations in English.

1. Opening - Open ( O)
2. Close - Close( C)
3. Maximum - High ( H)
4. Minimum - Low ( L)

A white candle indicates an increase over a certain period of time, and a black candle indicates a fall. Candle colors can be set at your discretion in the terminal settings.

Data OHLC Candles are displayed when you hover your mouse cursor over them. Here is how these options are displayed in the most popular terminal

Because price fluctuations are chaotic, then candles are of completely different types. For example, candles can be without shadows, or when the maximum is the opening price, and the minimum is the closing price. Or the opening and closing prices can be equal, etc.

By the candle, you can understand how the auctions were held in a given period of time, and who, in the end, took the advantage of sellers or buyers. Also, the mood of market participants is clearly visible: how wide the range of the candle is, and how cautious the players are when the range is small. This is clearly seen before the release of some important news, when the market freezes in anticipation, drawing candles with small ranges. Traders are still talking about such a market that it stands still.

Let's show you a great example when, thanks to candles, activity and reaction to news are clearly visible:

While waiting for the speech of the head of the ECB, the price moved in a small corridor. With the start of the performance, activity increased sharply and the price fell. This happens all the time at the exit. Therefore, at such times one must be extremely careful.

Learn to trade. Pass.

Quite often, thanks to the Japanese candlestick chart, you can detect reversals in the stock exchange in advance.

Pay attention to how long the shadows of the candles are in relation to the body. This is often a harbinger of a price movement in the opposite direction.

There are various combinations, consisting of one or even several candles, with which you can predict a market reversal or an increase in the previous trend.

Bar chart

Another type of price display, not as popular as Japanese candlesticks, but used by traders, mainly in the west. Looks like that:

There is some similarity with candles, but the price is displayed in the form of "bars" with "serifs" on the right and left.

1. Notch on the left - opening price - Open (O)
2. The notch on the right is the closing price - Close (C)
3. The rest of the data (high and low) are displayed exactly like Japanese candlesticks.

Analysis and forecasting is carried out in the same way as it is done with Japanese candlesticks. Therefore, we will not repeat the explanations. Let's better discuss the nuances of all types of chart display that we have analyzed.

Pros and cons of a line chart, Japanese candlesticks and bars

Let's display the pros and cons of the graphs in the table

	pros	Minuses
Linear	Well visible The ability to instantly see the state of affairs in the market	Almost no information
	High information content It is quite easy to visually understand how the price behaved for the selected period of time (black / white candle)	A little "visual noise". It can be difficult for beginners to read the graph. But with experience it completely disappears.
	Great if the forecast is based solely on the analysis of the range of the bar "Visual noise" is much lower than Japanese candlesticks	It is difficult to immediately, on the fly, determine whether the price is rising or falling in a selected period of time, as can be done with Japanese candlesticks

That, perhaps, is all that we wanted to talk about how to read charts on the stock exchange. If you have any questions - welcome to the comments! We will be happy to answer you.

Successful trading!

Leading Forex Broker -

Cryptocurrency exchanges work exactly like regular exchanges valuable papers. An experienced trader will take a little time to look at the price chart of BTC, ETH or another asset, while a beginner risks money very well. In order to understand and learn how to decipher data from a price chart, you need to understand the essence of the main Japanese candlestick chart, which can be found on any of the existing crypto exchanges.

Stock charts are the most important tool market analysis, as they present information about prices in a graphical, visual version, which is the easiest for a general understanding of the market situation than text or digital information. They allow you to see the mass behavior of the crowd, as well as assess the balance of power between sellers and buyers, which ultimately makes it possible to understand the profitability potential of transactions.

Types of stock charts

There are three main types of price charting – line, bar and candlestick. Each of these tools provides information about the opening price of the corresponding period, the closing price, the lowest and highest prices (except for the line chart, which is based only on closing prices).

Charts used by traders indicate price changes over a certain time period, for example, for 1, 30, 60 minutes, for a day, week, month or year.

In fact, stock charts this is the story of the struggle between bulls and bears for dominance in the market. As a result of such a struggle, a huge number of transactions are made, each of which is necessarily reflected on the chart - one tick corresponds to one such transaction. When the price rises, it means that someone is already suffering losses, and someone is already making money.

That is, in fact, stock charts are not just a conditional reflection of changes in value, but primarily show human emotions - fear and greed, despair and hope.

Japanese candlestick chart

This chart was invented by the Japanese rice trader Munehisa Homma in the 17th century and is currently the most common method of displaying market data. It is not very convenient to watch the usual price chart, therefore, to build “Japanese candlesticks”, the time is divided into periods, for example, 10 minutes. Such a division into periods makes the overall picture clear, which helps to judge the trend.

In our example, a schedule for 1 day is selected and each of its divisions corresponds to 1 hour. Here, the red and green rectangles (called "jittai" from Japanese for "body") are colored depending on whether the opening price was lower than the closing price of the period or vice versa.

How to read a YAS chart

The high and low prices are displayed as a vertical line in the body of the candle. On the example, it is easy to see that on January 8 for 1 hour from 10 pm to 11 pm the maximum rate was $958.21954, and the minimum was $922.84726.

In this case, we can see that the hour started at $935.00001 per 1 BTC and ended at $956.99000 per 1 BTC, so the rectangle is green.

The vertical line is called "kage" (shadow). Thanks to the shadows, similar to the wick of a candle, the chart got its name.

In practice, the relative length of the wicks can be used to judge the trend for the next period. The long upper part of the wick (compared to the lower one) may indicate further growth, and the longer lower part of the rate fall.

1. volume,
2. time,
3. price.

Because the analysis of trader charts comes down to calculating the balance of supply and demand. And the forces of supply and demand, according to the law of the same name, are expressed through price (vertical axis in the figure above) and volume (number of transactions, horizontal). By being able to read volume and price charts over time, a trader can see the change in the balance of buyers and sellers, and take an advantageous position in advance before the price starts to change.

Example of reading and understanding course chart

1. After the market opened, the price made a spring (a deceptive downward maneuver, knocking down the stops of yesterday's bulls, and dragging the bears into unprofitable sales).
2. A wave of buying, locking sellers in the red. The green color on the volume histogram exceeds the red one - purchases are made at the market price, a bullish sign.
3. Above the level of 80300 there is sot - shortening of the thrust - reduction of the breakthrough. Each new high shows a smaller increase in price on the chart. A sign that the bears are resisting. The subsequent descending wave at 9:45 is an additional confirmation of this.
4. The blue arrow at 10:16 shows a candle on the chart when the buying efforts did not bring growth. And most likely, they displayed sellers meeting ask-and above 80250 (also, by the way, sot)
5. The red arrow is a signal to enter a short position. In the background, we have several bearish signs that justify shorts. And this sell-dominant candlestick could represent the start of a down wave. The short opens in the next 2-3 minutes, for example at 80100, with a stop at 80250, and a target of 79500 – the level where the buyers showed their advantage, starting the morning up wave.

Deal Potential: Potential loss 150, Potential profit 600. Ratio: 1:4 is a good ratio for a trade with a high probability of success.

To improve your market reading skill, cover the right side of the chart with paper, and open it by sliding the paper to the right bar by bar. Fix your conclusions with each open bar and try to understand the essence of the ongoing processes.

Video lesson

For those who are completely new to this business, we suggest watching a short 3-minute instructional video. It gives a good idea and basic knowledge on deciphering crypto money rate charts.

Is it possible to make money on the stock exchange?

The famous trader, Richard Dennis, started trading on the stock exchange in the 70s with $1,600 borrowed and turned it into $200 million in 10 years. Dennis' strategy was fundamentally different from what his competitors were doing. While other exchange players were engaged in "scalping", that is, they made many transactions in one day, trying to catch minor changes in the course, Dennis held positions for long periods, trying to capitalize on trends (price movements). So the answer to the question about the possibility of earning is absolutely in the affirmative - yes, if you study and train. Successful trading on cryptocurrency exchanges!

Hello! I really wanted to learn how to understand and analyze the movement of certain securities using charts.

What is the difference between different types of charts? What are Japanese candlesticks? What about a line chart? The asset is the same, but the charts are very different.

In trading on the stock exchange, charts are needed in order to display the main price parameters in a convenient visual format. Charts are often used by traders who make many deals within one day: with active trading, a decision on a deal needs to be made at lightning speed, it is simply inconvenient to analyze data from tables.

Dmitry Semin

adept of Japanese candles

But it is also useful for conservative investors to be able to read charts: with their help, an investor can assess the profitability and behavior of an asset in the past.

Let's look at graphs with examples. Let's take the data from the table and present it on graphs of different types.

Everything is clear with the table: all important data on the price movement are indicated. We see how the price changed during the day: at what value the trading session started and at what it closed, what minimum and maximum thresholds the price reached for the whole day.

Tables are convenient to use when you need to get information on trading for a specific day: on Monday, the asset closed at a price of 55, and on Wednesday - at a price of 65. Minus: it is difficult to see the trend - how much the asset price rises or falls. It is possible to perceive the direction and change in the price of a security according to the table, but it is more difficult to do this than according to the chart.

line graph

This format of displaying changes is perceived by the eye as simpler than numerical data and can visually show what happened to the price and how quickly it changed during the week.

Using a line graph, it is convenient to track the change in time of any one parameter. There are four parameters in our table - of course, you can show them all on one graph with curves of different colors, but visibility will suffer from this. It is more convenient when the graph shows a change in one or two parameters.

Candlestick chart

Candlestick chart- type of chart with additional data on the price movement for the time period. If on the line chart we have shown only the closing price, then on the candlestick chart you can see all the data from the table: the price of opening and closing trades, the maximum and minimum price values ​​for the trading session.

There are two main types of candles:

1. Growing - if the price has increased during the formation of the candle.
2. Falling - if the price has decreased during the formation of the candle.

A candle, in which the opening and closing prices coincide, is sometimes distinguished into the third type - doji, this candle is also on our chart - on Wednesday.

By default, candles and bars are painted in two colors depending on the rise or fall of the price over a period of time. A green body means an increase in price, and a red body means a fall. But the convenient color of candles or bars can always be customized individually.

Shows the same parameters as Japanese candlesticks. The difference is only in the display.

Japanese candlesticks look easier to read, but the bar chart is still popular with traders in the West.

You can determine the price movement inside the bar by its "ears" - horizontal lines on its body. The left ear indicates the opening price, and the right ear - the closing price of the bar. If the left ear is higher than the right, the price has fallen and the bar will be red. If the left one is lower, the price has risen, the bar will be green.

Why an investor needs charts

Analysis of the past price action on the charts can be used to make sure that the company is doing well and the market has confirmed this before. Or as an additional confirmation that you did not make a mistake in the analysis of fundamental indicators.

But it is hardly worth using chart analysis as the only factor for making a decision on investing your funds. For a comprehensive analysis, you can pay attention to other indicators of the instrument: risks, profitability, practice and nuances of investing in a particular type of asset. Read our selections about investments to understand more deeply.

Learning the basic skills required to trade Forex, such as reading charts, is essential for a trader. The reason for this is that once you build up your knowledge base with this vital skill, it will be much easier for you when it comes time to learn and practice real forex trading.

Can't do without the basics

First, let's remember the basics of forex trading, because they are directly related to reading forex charts.

Each currency pair is always quoted in the same way. For example, the EUR/USD currency pair has the euro base currency, the EUR, and the dollar, as a secondary currency, and not vice versa. Therefore, the EUR/USD chart shows that the current price fluctuations are approximately 1.2155, which means that 1 euro can buy approximately 1.2155 US dollars.

And your trade size (nominal value) is the amount of the base currency you are trading. In this example, if you want to buy 100,000 EURUSD, you are buying 100,000 euros.

5 Basic Rules for Reading Forex Charts

1. If you buy a currency pair i.e. borrow , be aware that you are expecting this currency pair to go up on the chart in order to profit on the trade. That is, you want the base currency to appreciate against the secondary.

On the other hand, if you sell currency pair from a short position, then you need the currency pair to go down on the chart in order to profit on the trade. Therefore, you need the base currency to weaken against the secondary. So far, everything is quite simple.

2. Always check the displayed time period. Many trading systems use different time frames to determine the trade entry point. For example, a system might use a four-hour or thirty-minute chart to determine the general direction of a currency pair using indicators such as momentum, or support and resistance lines, and then a five-minute chart to look for a rise after a temporary fall to determine the actual entry.

Therefore, you need to make sure that the schedule you are considering has correct time frame for analysis. The best way to do this is to set the desired time frame for the chart and indicators for the system according to which you are trading, in order to save and then reuse these settings.

3. Most forex charts show the bid price, not the ask price. Remember that the price is always set with a bid and an ask (offer). For example, current price EURUSD can be 1.2055 bid and 1.2058 ask (or offers). When you buy, you do so at the ask price, which is the higher of the two spread prices, and when you sell, you do so at the bid price, which is the lower of the two prices.

If you are using the chart to determine entry and exit points, remember that when you place a sell order when the price on the chart is 1.330, that is the price you will sell at if there is no slippage.

On the other hand, you place a buy order when the price on the chart is the same, then you are effectively buying at 1.3333. The trading system often determines whether your orders will simply be placed according to the price on the chart, or whether you will need to add a buffer when buying or selling.

It should also be noted that on many platforms, when you place an order (to buy if the price rises from a certain price, or to sell if the price falls from a certain price), you can choose to either "stop on bid" or "stop on bid". ".

4. Remember that the time indicated at the bottom of the forex charts refers to specific time zones for which the graph data was generated, such as GMT, New York time, or others.

It will be convenient to have at hand a clock that displays world time in order to convert the time in different time zones. This is especially important if you are trading in line with economic announcements.

You will need to convert the release time to your local time and chart time in order to know when the announcement will be and therefore when you will need to trade.

5. Finally, check whether the time on your forex chart corresponds to the open of the candle or the close of the candle. Your charting program may differ from other charting programs in this respect.

If you want to trade on major economic announcements, either by entering a trade according to changes after such announcements, or exiting a trade before the announcement to avoid falling out of it in the process, then you need to be precise (to the minute!), as such trades are made in accordance with what happens in the first minute after the announcement, and not a candle later!

You now have 5 key chart reading tips that will help you avoid common mistakes that many novice forex traders make when reading charts. They will help you expedite the process of selecting a charting software package and trading systems which you want to use for Forex trading!