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Guide To Types Of Analysis Charts

Everyone who trades binary options needs at least one type of analysis chart. There are two primary types of analysis: fundamental and technical. Most traders have an opinion about which of these two is more beneficial, but both have chart usage in common. Although they may be slightly less important with fundamental analysis, charts are still an important part of being able to accurately forecast asset price movement.

Charts provide a visual representation of price performance throughout a defined time period. There are three key types: Candlestick, Bar, and Line. Each of these perform different functions and can be employed for different functions but their primary usage is for the purpose of analyzing just how an asset price is moving and how it is reacting to financial reports or support and resistance.

Candlestick Charts

These charts were created in Japan by Munehisa Homma during the 18th century. The candlestick will show you both the opening and closing asset price, along with the total distance that the price has traveled throughout the selected time period. This provides important information related to market tendencies because it conveys the tale of how the price shifted throughout the period.

Bar Charts

These charts provide you with the same exact information as candlestick charts, but offer a different visual appearance. Some refer to these as OHLC (open high low close) charts. The choice between candlestick charts and bar charts is merely an issue of personal preference since they provide you with the same information. The most sound advice it to take a good hard look at both of them and then decide which of the two you find easier to read.

Line Charts

These are the simplest of charts, displaying asset price movement as just as basic line. This type of chart does not offer you any information in regard to opening, closing, high or low prices. It isn’t going to tell you what occurred during the time period being analyzed. This type of chart shows up in many binary options platforms since it is provides clear and concise information that is easily processed by novice traders.

The best way to compare and use all three types of charts is to get a free version of Meta Trader 4 from a Forex broker. This will provide you with the charts plus indicators, Fibonacci, and additional tools for analysis. MT4 provides a lot of different functions, but if you’re new to trading then consider starting out with just the most basic chart views and then gravitate to the more complex processes after you’ve gained some experience.

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