READING A TRADING CHART
What Is a Chart?
A trading chart is a visual representation of price over time.
It allows you to see:
- Previous prices
- Current price
- Highs
- Lows
- Trends
- Ranges
- Potential areas of interest
The most common chart type used by traders is the candlestick chart.
Price and Time
A chart has two main components.
The horizontal axis represents time.
The vertical axis represents price.
As you move from left to right, you’re looking at price developing through time.
Why Charts Matter
Charts allow traders to analyse historical price behaviour.
You can identify things such as:
- Trends
- Support
- Resistance
- Market structure
- Breakouts
- Consolidation
However, historical price doesn’t guarantee what will happen next.
A chart provides information, not certainty.
Key Takeaways
- Charts display price movement over time.
- The horizontal axis represents time.
- The vertical axis represents price.
- Charts help traders analyse market behaviour.
Disclaimer
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
