Charts are considered the all-powerful key to success in the financial markets. Whether you are a technical or fundamental analyst, a short-term or long-term trader, it is essential to read the charts and understand their components, allowing you to be more productive and accelerate your learning curve in the financial market. This post shows you how to read Forex charts on MT4, which is the most popular platform worldwide.
What is a forex chart?
A chart consists of prices plotted in a specific time frame. In addition to helping traders monitor the value of current orders, it also allows traders to see past prices and help predict the future direction of prices. So, knowing how to read price charts is an essential step in your journey to becoming a trader.
How to read forex charts on MT4?
The upper left corner of the screen shows the following information (going from left to right):
- The ticker of the tool
- Time range: The period displayed in a chart depends on the selected time interval. MT4 offers nine time frames for traders (1 minute to 1 month)
- Opening price
- Higher price
- Lowest price
- Current price
- Below are the sale and purchase prices at that time. These prices change continuously during the session. You can open the trading window by clicking on it.
The main chart: Here you can track the price history of that tool.
By default, the chart is displayed with a black background and a candlestick chart type. Candlestick charts often include many different candlesticks, where the empty candle shows a bullish price. On the contrary, a white candle indicates the bearish. And each candle shows the price movement corresponding to 1 period of that chart.
For example, each candle represents the price change of a day in a daily chart. Similarly, a candle is the price of 1 consecutive period of 4 hours in the H4 chart.
Some basic operations when viewing price charts:
- Scroll down to see past price history and scroll up to see recent price movements.
- To zoom in and out of the chart, click Zoom In, Zoom Out on the toolbar, or press (-), Shift + (+) on your keyboard.
- If you want to know the exact price at a specific point, use the Viewfinder tool (with a plus sign) on the MT4 toolbar or press Ctrl + F.
- In addition, you can also easily customize the chart by going to Chart -> Properties and changing the settings there. (In the following article, we will show you how to customize the chart in detail).
The bottom horizontal bar represents the Timeline.
The vertical column indicates the price level.
The top right corner (from left to right respectively) includes:
- The Minimize button is used to minimize or restore the chart.
- The Expand button allows you to enlarge/restore the chart display area.
- The Close button is used to close the chart area completely.
How to read a candle in forex charts?
Candlestick charts are widely used in the forex, stock and cryptocurrency markets.
To better understand the structure of a candle, let’s learn about the prices displayed in a candle. Each candle includes a candle body and a shade.
- The body of the candle is the white or empty part (without color)
- Candlestick shadows are two small sticks located at either end of the candle’s body.
- The upper part of the upper shade is the highest price in that period of candles. The minimum of the lower shade is the lowest price in that period of candles.
- The body of the candle shows the opening and closing prices. The color of the candle indicates whether the value of the asset has increased or decreased over the period. With the candle empty, the opening price is lower than the closing price. The opening price is higher than the closing price with a white candle.
To sum up, the price chart is a valuable tool for every trader and investor. Based on the price chart, traders get a better overview of the market. Therefore, regardless of the trading style you follow, the price chart is an essential tool for trading in the financial markets in general and forex in particular.
