Types of Trading Charts

Trading charts have been around for centuries and they have changed a lot since then. In forex trading, a chart is essential as it helps you make analysis on the market and decide what to trade. Forex charts also help you plot your exit and entry points. You can get these charts from many sources and you should choose one that suits your needs. Here are some types of charts you might encounter:

Line chart. The easiest of all trading charts in forex, line charts represent the fundamental analysis method used by investors worldwide. The x and y axes represent time and price, respectively, while the line shows the trend line of an underlying security or asset. The trader must be careful when interpreting these charts as prices could easily go in either direction. As with other types of charts, understanding trading charts is essential for the successful trader.

Monthly chart. Most investors buy a stock in a company every day. The average investor follows the stock market's movement using a monthly chart, which compares how much the stocks have gained or lost over the past 30 days. These charts help investors see how companies behave during certain periods of the year and when to expect increases or decreases in earnings per share (EPS). Some investors use monthly charts to anticipate when they plan to sell or buy certain securities.

Trading Charts

Technical analysis. Many investors rely on technical analysis in the stock market. Technical analysis shows the trends of a security or asset over a period of time as well as the long-term trends. This type of trading charts looks at the history of trends and how they are influenced by economic factors. Some technical analysts look at the price and volume patterns in trading charts as well as historical data such as news releases and commentaries on a particular security or company.

Long-term trend. A long-term trend is a representation of the overall value of a security or company. It shows how a security has done compared to other securities in the same category over time. Investors who buy and sell securities on a short-term basis may look at a long-term chart. Long-term trading charts also are helpful for investors who want to take positions over the long-term because they show the ups and downs of the stock market over extended periods of time.

Short-term trend. Short-term trading charts are used primarily by individual investors who are looking to take advantage of short-term trends. Short-term charts display trends that are expected to change in the near future. These charts do not account for daily fluctuations in the stock market that can occur over just a few minutes to a few hours.

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