When you start doing forex trading you obviously need to be aware of what market you are going to explore including knowledge and terminologies that are often not so well known on other markets.

Alongside this, however, a considerable technical analysis preparation is required, the only help capable of providing fast and statistically reliable operating signals to be placed on the market.

In addition to the traditional technical analysis notions, however, it is important to know how to construct a graph on the various trading platforms offered by the major online brokers such as professional IB broker.

The most popular graphical models are the line, bar and candle graph.

The line graph is easier to construct and interpret. Every closure finds a place on the graph and the union of these various points in sequence forms a dynamic line. The advantage of simplicity contrasts with the disadvantage of not being able to have the price pattern from which the operating signals emerge; usually, these patterns are also based on other information such as price hikes during the day (top price, low price and opening price), that we cannot get from line graphs.

The most popular second graph is the bar graph. The design of each period is made by a vertical bar in which the highest point is the top of the day and the lowest point is the low. These bars are then integrated with small horizontal lines which are, depending on their location, the opening or closing prices. For what concerns the opening, the horizontal line is positioned to the left, while the vertical one is positioned to the right.

This type of chart, compared to the linear one, provides us with additional graphically interesting information, very useful to formulate trading signals.

Many price patterns have been formulated precisely for this reason, based on bar charts.

Even the bar graph, however, has had to deal with another kind of chart that during the last decade has gained an immense popularity among those who do forex trading: the candlestick chart.

As for the bar chart, the candlestick chart is based on a design created by using data from opening, closing, highest and lowest of the day. As happens for the bar graph, the candlestick chart can be used for each temporal scan (daily, weekly, monthly or intraday 60 minutes or 1 minute).

However, the similarities end there. The candlestick chart comes from the use that was done by the traders in Japan. Its advantage is represented by the immediate graphic visual offered by the used colours (these are different depending on whether the market closes the session upward or downward), but also by its ability to provide an immediate view of the strength of buyers-sellers on the market. Many price patterns from which the operating signals are originated are based on this strength.

Patterns like the hammer, the shooting star, the bullish / bearish engulfing pattern absolutely have to be part of the vocabulary of a forex trader who wants to actively participate in market movements.

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