I have opened my
MetaTrader 4 so we can analyze the different types of charts. Here you can see that we have three buttons
and they identify three different charts that you can use with your MetaTrader 4. The first one is
called bar chart;
the second one candlestick chart and the last one is called Line chart.
Let's start with the line chart because it is very easy.
If the price of euro-dollar was 1.11 yesterday and it is 1.12 today, the line chart
would only connect the two points with a line.
So it is very easy to understand with a quick look if the price is going up or down.
The second chart I'm going to introduce is the bar chart.
While the line chart gives information only about the opening and closing prices,
the bar chart also provides you with information about the high and the low for the session.
The horizontal dash on the left side indicates the opening price and the dash on the right side indicates
the closing price.
The vertical line gives information about high and low.
The bottom of the vertical line is the lowest price reached during the session.
While the top of the vertical line represents the highest point reached during the session.
For example we can have a bar like this.
What kind of information can you read on this bar?
You can say that at the beginning of the session the price was 1.12, during the session the
price dropped to 1.1150,
that is the lowest point for the session.
The price also reached 1.1370,
that is the peak for this session.
At the end of the session the price closed at 1.1290. With a simple bar you get a lot
of information. Last chart
we need to analyze is the candlestick chart that, as you may have guessed looking at the title of the
course, it is the one that we are going to use. The candlestick chart is built in the same way and
gives exactly the same information as the bar chart.
But it is displayed in a way that you can quickly analyze the movements and the trends on the market.
A candle stick looks like this.
We have a vertical line that is called Shadow.
So we have the upper shadow and the lower shadow.
Then we have a large block in the middle that is called body or real body.
The real body is usually coloured to give traders a quick idea about the direction of the price.
I use green candles when the price goes up and red candles when the price goes down.
Another popular choice is to have white candles when the price goes up and black candles when the price
goes down.
I use the price example that I have used for the bar chart so you can see that the candlestick
chart is the same. The opening price is at 1.12. Then the lower shadow
shows a low at 1.1150 and the upper shadow shows a high
at 1.1370. The price then closes at 1.1290.
In addition, you have the colour of the candle that gives you immediately the information that the price
increased in that session.
Let's see an example on the Meta Trader.
Here we have euro-dollar on a daily chart.
I want to analyze this candle, not the last one because it is still live on the market and it can still
form a new high or a new low
and furthermore we don't know what will be the closing price.
So I draw my lines to identify the key levels of this candle.
We have the opening price then we have the closing price here, then the low
and here we have the high.
Also, there is no need to draw the lines.
If you go with your mouse cursor on the candle Meta trader will give you all the information here.
You can see o, h, l, c that stand for open, high, low and close.