There is no doubt that technical analysts hardly make trading decisions without technical charts representing historical prices, volume and time frames. Traders are offered three different chart types when trading in MT4. This article explains how to change the MT4 chart type.
How to change the chart type
In MT4, there are three different types of charts to show the price movement of an asset. There are several methods you can use to switch between chart types.
The fastest way is to use the Charts toolbar.
To do this, click on the favorite candlestick icon on the toolbar to switch to the chart type:
Note: If chart types do not appear in toolbars, click View Toolbars > > Standard, which then shows different chart types.
What are the different chart types in MT4
Like most trading platforms, MT4 offers traders three types of charts, including:
- Candlestick chart
- Bar chart
- Line chart
A candlestick chart represents the price movements of instruments over a given period of time. This type of chart is very popular among traders because they are easy to read and understand.
A candlestick offers a wide range of information in a simple way, including high, low, open and closing prices in a given period of time. The trader can set this time frame according to his needs.
For example, if the time limit is set at one hour, a new candlestick is created every hour in the chart.
A candlestick is composed of a body and wicks (fine lines that extend above and below the body).
- The “body” of each candlestick shows the opening and closing prices
- Candle wicks show the high and low prices for each period.
The color of the candle indicates whether the value of the asset has increased or decreased over the period. More specifically, hollow candles reflect that the price closed higher than where it opened (often called a bullish candle), and each white candle means that the price closed lower than where it opened (often called a bearish candle).
What makes the candlestick chart an improvement over others is that it provides the trader with more information while remaining easy to view at a glance. So, the candlestick chart is by far the most popular chart type used in technical analysis.
Like the charts above, a bar chart reflects the price movement of a financial instrument. Each bar represents a specific time interval.
- The vertical line is created by the high and low prices for the bar.
- The hyphen to the left of the bar was the opening price, and the hyphen on the right indicates the closing price.
Traders may find bar charts difficult to follow at first glance, but in essence, bar charts are quite simple to read and great for analysis.
By removing color from the chart, traders can view market sentiment (bullish/bearish) with a simple perspective, which especially benefits trend traders.
Line charts are the simplest type of chart. Charts typically show closing prices and nothing else. Each closing price is tied to the previous closing price to create a continuous and easy-to-follow line.
Although the line chart provides less information than candlestick or bar charts, it is better for at-a-glance viewing for a simplistic view of the market. Price charts also help to easily visualize a developing trend. This is done simply by looking at the direction the line is taking.
In addition, the line chart can help manage the emotions of trading by eliminating “unstable” movements in different colors as seen in candlestick charts and selecting a neutral color such as the blue chart depicted above.
In conclusion, although these different charts are all created using the same price data, they display the data in different ways. So, selecting a trading chart is largely a matter of personal preference. Ease of reading and comprehension should be given priority consideration. If you are interested in experimenting with the different chart types and understanding their capabilities, use the MT4 demo account before switching to real money trading.