Trader use charts to determine market direction and identify possible buying and selling opportunities. There are three types of charts commonly used in trading,

  • Line chart;
  • Bar chart;
  • Candlestick chart.

Line Chart:
These charts are handy for quickly determining the trend – only the current/close price is graphed – as such these charts should not be used for placing stop loss or take profit orders.

Bar Chart:
The chart is created with the use of bars where each bar has a high (top) and a low (bottom) with a line on either side; right side being the opening price and the left side being the closing price for the selected time period.

Candlestick Chart:
This chart is created much like bar charts, with the only difference being that candlesticks add dimension and colour to the Bar Chart by depicting the area of the bar between the open and close as a two dimensional real body.

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