Introduction to Charts

A chart or graph is a type of information graphic or graphic organizer that represents tabular numeric data and/or functions. Charts are often used to make it easier to understand large quantities of data and the relationship between different parts of the data. Certain types of charts are more useful for presenting a given data set than others. The charts are one of the main interests at Sigma. Charts are a statistically noticeably technical analysis tool for a trader that wants to carry out successful trading. Currency charts bring clearly a single period of time and that period could range from one minute to one month to several years.

There are several kinds of price charts in forex and also stock trading. Some of them are really useless and I think almost nobody use them to trade.

• Line chart

• Candlestick chart

• Bar chart

Line Chart

In the line chart, the price changes are shown using a line. Even the line charts have to be plotted according to a special time frame but we are able to determine if we like the chart to be plotted according to the open price, close price, high price or low price. Close price is more reliable and popular because most traders don’t care about the price fluctuation during a time time frame and only the close price is important for them.

( Line Chart )

Candlestick Chart

It’s the oldest types of charts developed in the 18th century by legendary Japanese rice trader Homma Munehisa, this style of charting is very popular due to the level of ease in reading and understanding the graphs.
Each candlestick includes the open, high, low, and close, of the timeframe, and also shows the direction (upward or downward), and the range of the timeframe.

The candlestick provides a visual details more than any other chart.

( Candlestick Chart )

Bar Chart

Is a chart with rectangular bars of lengths usually proportional to the magnitudes or frequencies of what they represent.
Uses bars to show frequencies or values for different categories, also known as a bar graph.

Bar charts are used for comparing two or more values. The bars can be horizontally or vertically oriented.
Sometimes a stretched graphic is used instead of a solid bar.

Each bar contains 4 'hooks' (the opening, closing, high and low (OCHL) rates of transactions at a certain time interval).

( Bar Chart )