Trading charts are useful tools when it comes to keeping track of the market and your underlying instrument’s price swings. They can also be used to identify potential opportunities to enter or exit a trade. This video, in particular, is dedicated to trading charts. Watch it to find out how trading charts work, the different types of charts available, in general, and on Plus500 in particular, and learn about the most frequently used charts among traders; Candlestick Charts, Bar Charts, and Line Charts.
What Are Trading Charts?
A trading chart shows the price movements of a certain financial instrument like Shares, Forex, or Commodities, over a period of time which can range from minutes, hours, days, or weeks. Technical traders refer to and analyse trading charts in order to predict future price movements of certain financial assets. Although past records are no guarantee of future performance, many traders employ trading charts in their trading strategies in order to forecast future performance.
What Are the Most Popular Trading Charts?
While there are a plethora of trading charts available, over 10 types of which are available at Plus500’s trading platform, the three most commonly used trading charts among traders are Candlestick Charts, Bar Charts, and Line Charts.
Candlestick Charts
Candlestick Charts originated in Japan in the 18th century and as their name entails, are shaped like candles. This is why they’re also called Japanese Candlesticks. This type of chart gauges traders’ emotions by visually representing the size or price moves in different colours, usually green or red. While green candles represent upward movements from the opening to the closing prices, the red ones reflect a downward trajectory. Traders use candlesticks to formulate trading strategies based on regularly occurring patterns. They do this in an attempt to forecast the short-term direction of the price.
In terms of timing, each candlestick represents a one-time interval and is segmented into four main data points; opening, closing, high, and low prices. Open and close prices depict the first and last price of a certain instrument for the selected time frame. Similarly, high and low prices describe the highest and lowest price points within the specified time frame.
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Bar Charts
Bar charts are believed to have been developed by Scottish engineer William Playfair in 1786. Each Bar Chart refers to a specified time period, ranging from minutes to hours, to days and weeks, and shows the open, close, highest, and lowest prices of an instrument within a selected timeframe. These bars have a vertical line that shows the price movements within a selected time frame. Accordingly, a horizontal bar to the left indicates the instrument’s opening price, whereas a horizontal bar to the right highlights its closing price. Moreover, longer vertical lines show periods of increased volatility while shorter bars reflect lower price movements and changes.
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Line Charts
Similar to Bar Charts, Line Charts are also thought to have been developed by Playfair. However, this type of chart is considered more straightforward as it is perceived to be one of the most basic and easy-to-read charts. A Line Chart is basically comprised of price points that connect to one another by a straight continuous line. Each Line Chart usually includes the closing prices of certain instruments within a specific time period and also highlights the open, high, and low prices. Moreover, Line Charts are considered ideal for beginners. Nonetheless, some traders prefer to refer to other types of charts since Line Charts don’t always present enough information.
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What Types of Trading Charts Does Plus500 Offer?
In addition to the aforementioned charts, Plus500 offers over 10 types of trading charts that can cater to the different trading styles and needs of its customers. Accordingly, Plus500 also offers Baseline Charts, Hollow Candle Charts, Mountain Charts, Colored Bar Charts, Heikin-Ashi Charts, Renko Charts, Kagi Charts, Line Break Charts, Range Bars Charts, and Point and Figure Charts.
For traders seeking to gain knowledge regarding the movements of more than one financial instrument from various sectors, Plus500 also offers a free-of-charge Multiple Charts view option. This feature, which is available on Plus500’s web app, allows users to view many charts on different underlying assets all on one screen. This feature can be time-saving and efficient for those who have multiple positions opened on different instruments, or for those who would like to understand the market better from a macro perspective through a myriad of sectors.
* Availability subject to regulation.
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