Whether you are planning to trade forex, options or doing a binary trade, the need for the use of forex charts is inevitable in most cases. In the aspiration to be a competent currency trader, if you stop for a moment and give yourself the room to think then it would be revealed to you that preparation plays an integral role in making you a competent player in the forex market and achieving the goals you intend to get close to through trade. Fuad Ahmed believes that the reason charts are considered vital players in the forex trading is that in almost 70% of the cases, beginners fail at trading and only 10% of them remain successful in the initial days of trading.
These reasons do not seem significant as the common belief says people can achieve a high level of success in trade if they are smart and intelligent. However, Fuad Ahmed is of the view that a failure is directly proportional to the impulsiveness or inexperience that can translate into something destructive for the trader. He says that traders who aim at instantly receiving fame and profit are usually the ones that end up losing their investment in the most terrible way. The first mistake that the wannabee traders make is blocking all their investment in one place without following any charts or pre-information, this results in most setbacks for the traders in the field of forex trading.
Fuad Ahmed, currency trading expert views the situation and suggests that the factors responsible for success in a trade are almost the same as any other profession. It takes knowledge, emotional composure and experience to excel in any field. The first according to him is achieved by learning the pre-requisites that are required to approach the market in an organized manner, followed by taking a one by one gradual ladder to the implementation of a trading plan pre and post the closure of the position.
The currency trading expert Fuad Ahmed opines that the issue of repeated failure these novice traders that newly jump in the trading sector face can easily be resolved by the use of forex charts and indicators
Forex charts or a charting package lets a trader take help from the historical data and currency exchange rates. The charts can also be used for trading other securities like options, stocks or futures. The primary use of these charts is made by the technical analysts or chartists that develop or put the news in this form to facilitate the trader.
So be it the use of binary options, or forex, a significant difference can be noticed after the usage. The article has a description of some of the types of forex charts that help traders grasp a better understanding of the market and concepts they have to follow to win at forex trading.
The three main types of forex charts that are used by traders are listed below
- Line Chart
- Bar Chart
- Candlestick Chart
The most common chart used by traders in forex is a candlestick, yet Fuad Ahmed has explained the benefits and uses of all kinds of charts to ensure his readers understand the phenomenon in its complete sense.
Line is the kind of chart that is made of a series of different dots connected through a line to show the movement of the market
These charts are the most basic of all and do not give the trader a whole lot of information. This is the main cause of most traders not opting for the line charts.
Line charts, other than basic, can also have some very advanced uses in price action, which traders learn after much deliberation or spending too much time in the trading business.
In forex trading, bar charts are used as a result of series of bars. These bars are indicators of high and low prices, along with the opening and closing prices for a continued period. The highest point is shown at the top of the bar while the lowest point is shown at the bottom when the prices fall. On the left is a dash or hyphen which indicates the price at which the price opened, whereas the right dash shows the closing price for the bar. The other term that the bar charts are called with is OHCL (Open, High, Close, Low)
Bar charts provide relatively more information on about currency price changes than any other kind of charts, however, the use of it is not so easy and can cause the trader a great trouble in reading it. The chart is designed in a way that it appears to be a web of many bars put together. The real problem is caused when the trader has zoomed in to read and zooms out while there appear too many bars on the screen to confuse the trader and keep a track of price in an orderly manner. This is exactly when the need for candlestick chart arises in the picture.
Candlestick charting is the product of old Japan. The Japanese used to manage the trading of rice, which was their chief crop in the form of candlestick charting. The use of these charts used to help them keep track of the primary changes coming at the prices of the export and import.
The candlestick charts are somewhat same as the bar charts. But, many traders like to use candlestick charts as they are easier to read and comprehend.
The shape of the candlestick is different than bars, as the dash that shows opening price and the one that shows the closing price is different from the bars in bar charts. The candlestick gives it a clearer and easier view to see the closing and opening dashes in the chart. The difference in charts is represented by many colours that show the movement from up to down and fluctuation in prices.
Candlestick charts are the most commonly used charts in the forex trading. These make up the largest part portion of an active trading strategy that demands a rapid action from the trader.
Charts play an integral role in any kind of trade, be it forex, stocks or options trading. Fuad Ahmed recommends his readers to take a cue from the forex charting tools like bar charts, line charts and the most popular one the candlestick chart to excel the art of trading and avoid losing big amounts of investment in just vain. Forex charting can be of an enormous help for the trader, especially if he is a novice and is learning to stay in the market.