How to Read Forex Charts on MT4?
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Charts are considered the almighty key to success in the financial markets. Whether you are a technical or fundamental analyst, a short-term or long-term trader, it is essential to read charts and understand their components, enabling you to be more productive and help accelerate your learning curve in the financial market. This post shows you how to read Forex charts on MT4 which is the most popular platform worldwide.
What is a forex chart?
A chart consists of prices plotted over a specific time frame. Besides helping traders track the value of current orders, it also allows traders to see past prices and help predict the future direction of prices. Hence, knowing how to read price charts is an essential step on your journey to becoming a trader.
How to read forex charts on MT4?
The upper left corner of the screen shows the following information (going from left to right):
- The instrument’s ticker
- Timeframe: The period shown on a chart depends on your select time frame. MT4 offers nine timeframes for traders (from 1 minute to 1 month)
- Opening price
- Highest price
- Lowest price
- Current price
- Below are the Sell and Buy prices at that time. These prices change continuously during the session. You can open the trading window by clicking on it.
The main chart: Here, you can track the price history of that instrument.
By default, the chart is displayed with a black background and a candlestick chart type. Candlestick charts often include many different candles, in which hollow candle shows bullish price. Conversely, a white candle indicates the bearish. And each candle shows the price movement corresponding to 1 period of that chart.
For example, each candle represents a day’s price change in a daily chart. Similarly, a candle is the price of 1 consecutive 4-hour period in the H4 chart.
Some basic operations when viewing price charts:
- Scroll down to see past price history and scroll up to see recent price movements.
- To zoom in and out of the chart, click the Zoom in, Zoom out on the toolbar, or press (-), shift + (+) on the keyboard.
- If you want to know the exact price at a specific point, use the CrossHair tool (with a plus sign) on the MT4 toolbar or press Ctrl + F.
- In addition, you can also easily customize the chart by going to Chart -> Properties and changing the settings there. (In the following article, we will show you how to customize the chart in detail).
The bottom horizontal bar represents the timeline.
The vertical column indicates the price level.
The upper right corner (left to right, respectively) includes:
- The Minimize button is used to minimize or restore up the chart.
- The Expand button is to enlarge/restore down the chart display area.
- The Close button is used to close the chart area completely.
How to read a candle in forex charts?
Candlestick charts are widely used in forex, stock, and cryptocurrency markets.
To better understand the structure of a candle, let’s learn about the prices displayed in a candle. Each candle includes a candle body and a shadow.
- Candle body is the white or empty part (no color)
- Candlestick shadows are two small sticks located at the two ends of the candle’s body.
- The top of the upper shadow is the highest price in that candlestick period. The low of the lower shadow is the lowest price in that candlestick period.
- The candle’s body shows the opening and closing prices. The color of the candlestick indicates whether the value of the asset rose or fell over the period. With the empty candle, the opening price is lower than the closing price. The opening price is higher than the closing price with a white candle.
To sum up, the price chart is a valuable tool for every trader and investor. Based on the price chart, traders get a better market overview. Therefore, no matter which trading style you follow, the price chart is an essential tool for trading in the financial markets in general and forex in particular. The following article will show you how to customize your chart to suit your trading style.
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