A trading chart is an essential tool for forex traders. It allows you to see a stock’s price history, trade from it, and predict the most favorable time for entering and exiting the market. Forex charts are usually a part of trading apps, and so today, we will learn what charts are available on the MetaTrader 4 platform at Mtrading forex broker, and how to configure them for your needs.
Opening A Chart In Metatrader 4
Open a chart on your web trading platform as a starting step. For the sake of application, we’ll utilize MetaTrader 4 as an example in this article. Additionally, the most suggested platform for beginning Forex trading is MT4. However, whether you are using MetaTrader 5 or another trading platform, the following steps should be relatively comparable.
Choose a currency pair from the Market Watch window, right-click it, and then select “Chart Window” to launch a new chart.
Choosing A Forex Chart Type
There are three main types of Forex Charts, bar charts, candlestick charts, and line charts.
The chart is made up of bars, each of which has a top (high) and a bottom (low) with a line on either side; the right side represents the opening price and the left side the closing price for the chosen period. Bars that close higher than the open (bull or up bars) or lower than the open can be distinguished using various colors (bear or down bars). The bar chart lets you clearly see the price movement and learn whether a trend exists. However, Performing technical analysis and seeing patterns that translate into a trading strategy may be challenging.
The sole difference between this chart and bar charts is that candlesticks portray the bar region between the open and close as an actual two-dimensional body, giving the bar chart more depth and color. The body of a candlestick represents the price gap between the open and closed prices. When the close is higher than the open, it is known as an up candlestick; when it is lower than the high, it is known as a down candlestick.
Candlestick charts are the most accurate depiction of price movement since they display all the significant price levels for a certain time frame and enable us to see patterns and use technical analysis tools more efficiently. However, it may fall short when attempting to evaluate the general market trend. Contrary to bar charts, color indicates whether a bar is bullish or bearish.
Since just the current/close price is graphed, these charts are useful for rapidly identifying trends, but you shouldn’t utilize them to set stop loss or take profit orders. These charts allow the trader to discover or spot market patterns because of their simplicity. However, since the line chart is solely based on closing prices, you can miss out on crucial information concerning price activity.
Chart Elements In Metatrader 4
The chronology of the chart, which is the X or horizontal axis at the bottom of every chart, is the first element you can recognize. Depending on the timeframe you choose to conduct your market study, it links several time frames (minutes, hours, weeks, or months). It is significant to note that, when reading the timeline, the older the period you will see, the further you move to the left. As you move to the right, you will see additional periods.
The price levels are shown on the right side of the chart on the Y or vertical axis. The values will vary depending on the currency pair you wish to study. But they all travel in chunks known as pip.
Remember that prices rise from the bottom to the top. When you read the pricing in conjunction with the chronology, the following conclusions follow:
- Any chart will show an upward trend if prices rise from left to right; conversely, if prices fall, you are likely observing a negative trend.
- If prices vary within a price range, the market may behave sideways or exhibit a horizontal trend.
Current Price Line
On the chart, you’ll see a moving line element that depicts the price movement over time. The current Bid price of a currency pair is shown by this line, also known as the price line. It is crucial to make clear that there are always two different sorts of pricing in forex: the bid and the ask. If you wish to buy a currency pair, you will be given a quote at the Ask price. On the other hand, you must use the Bid price if you wish to sell a currency pair.
When selecting properties from the context menu, right-click a chart in MetaTrader 4, and you may see both price lines (or press F8). Then click OK after selecting the Common tab and checking the Show Ask Line box. The spread, also known as the fee your broker earns for each deal you make, is represented by the space between the Ask Line and the Bid Line. Depending on the currency pair and its liquidity, this gap will change.
Customizing Your Forex Charts
Making your chart templates for viewing Forex charts might be useful to save time and accommodate your preferences when doing analysis. Follow these easy steps to personalize your charts in MetaTrader 4:
- When you right-click your chart, choose Properties.
- The window that follows will appear, allowing you to change various chart elements:
Saving Chart Templates
By selecting the Save Template option from the context menu when you right-click the chart in MetaTrader 4, you can save a chart template with your chosen parameters. Give it a name, after which click “Save.”
Loading Saved Charts
Open a new Forex chart in MT4, then right-click it and choose the load template option to load your chart template with your customizations. Next, pick a template.
Remember that charts are designed to visualize price fluctuations of underlying assets, and they are built on the idea of plotting price bars, whose length depends on the time interval you choose. That’s the main thing your charts should show if you want to trade successfully. If you plan to trade foreign exchange efficiently, you must know how to read these charts. In addition to that, you need way more education in Forex trading to be able to use chart analysis correctly. Otherwise, you will fail with your trading system.