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Forex Trading And The Characteristics Of Bar And Candlestick Charts.

There is a very important factor that you should consider with great care if you are willing to become a successful and profitable Forex trader. This always important tool; in other words knowledge, that should be always present in your trader's portfolio, is the ability to read the charts.

There are two charts that are the most common types of price charts used in Forex trading, these are the Bar Chart and the Candlestick chart.

Here are the main characteristics of each of them:

Bars Charts - Price bars are a linear representation of a period of time, and this period will depend on the intervals of time you are interested on viewing and analyzing in the chart. This enables the viewer to see a graphic representation summarizing the activity of a specific time frame. For example they can be one minute or five-minute time intervals depending on the system you are using. Each bar has similar characteristics no matter the time interval and tells the viewer several important pieces of information about how a particular currency pair is behaving. First, the highest point of the bar represents the highest price that was achieved during that time period. The lowest point of the bar represents the lowest price during the same period. Regular bars display a small dot on the left side of the bar which represents

the opening price of the period and the small dot on the right side represents the closing price of the period.

Candlesticks - Japanese Candlesticks, or simply Candlesticks as they are most widely known now, are used to represent the same information as Price bars. But they differ in how the gap between the open and close form are represented. These two prices form a body of a box which is displayed with a color inside. A red color means that the close was lower than the open, and the blue color represents that the close was higher than the open. If the box has a line going up from the box it represents the high and is called the wick. If the box has a line going down from the box, it represents the low and is called the tail of the candle. Many interpretations can be made from these "candlesticks" and many books have been written on the art of interpreting these bars. Many experienced traders highly recommend this kind of chart over the bar charts for the great amount of information they give with a single view.

About the author:

Adrian Pablo is a freelance writer with articles published in a number of places. Get a free report on Fibonacci Trading and learn more about the world of trading, visit the website: http://www.1-forex.com
 
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Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest / trade in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading.

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