Search...


Introduction to Price Charts
(https://priceaction.com/price-action-
university/beginners/price-charts/)
Posted by Nial Fuller (https://priceaction.com/contributors/nial-fuller/)    Leave a
comment (https://priceaction.com/price-action-university/beginners/price-
charts/#respond)

Introduction to Price Charts

A price chart displays the price of a particular market over a period of time.
You can change between di"erent time frames on any charting platform. Chart (https://www.learntotradethemark
time frames range from 1 minute charts all the way up to monthly and yearly et.com/forex-trading-course)
charts.

There are three main types of charts: Line charts, Bar charts and Candlestick
charts. For price action trading, the candlestick chart
(https://priceaction.com/price-action-university/beginners/candlesticks/) is
most commonly accepted as the ‘best’ type of chart to use.

However, let’s go through a brief overview of each chart type just so you get
familiar with them…

Line Charts

Line charts display the price of a market via a line that typically connects the
close of one time period to the close of another. Here’s an example of a line
chart: (https://www.learntotradethemark
et.com/forex-trading-tools/new-
york-close-charts-forex-broker-
platform)

(https://priceaction.com/wp-content/uploads/2015/08/linechart.png)

The main advantage of a line chart lies in providing you with a quick view of
the overall market trend and support and resistance levels. They are not
practical to make trade entry or exit decision from because they do not display
individual price bars. However, as previously stated, if you want to get a quick
view of market trend and key levels, a line chart may prove useful occasionally.

Bar Charts
:
 A bar price chart shows a ‘standard price bar’ for the time frame being
observed. If you’re looking at a 1 hour chart, you will see a standard price bar
for each 1 hour time period, a daily bar chart will show a standard bar for each
day on the chart, etc.

Each individual price bar gives us four pieces of information that we can use to
help us make our trading decisions: The open, high, low, and close. You will
sometimes see bar charts called OHLC charts (open, high, low, close charts),
here’s an example of one price bar:

A bar chart will display each period of time as a standard OHLC price bar, as
seen here:

Candlestick Charts

Candlestick charts are price charts that consist of candlesticks

(https://priceaction.com/price-action-
university/beginners/candlesticks/)instead of traditional price bars, as
discussed above. Each candlestick shows the high, low, open and close for the
:
 period of time it reflects, this is the same information reflected in traditional
price bars, but candlesticks make this information much easier to visualize and
make use of…

Candlestick charts indicate the high and low of the given time period just as
bar charts do, with a vertical line. The top vertical line is called the upper
shadow while the bottom vertical line is called the lower shadow; you might
also see the upper and lower shadows referred to as “wicks” or “tails”. The
main di"erence between bar charts and candlesticks charts, lies in how
candlestick charts display the opening and closing price. The large block in the
middle of the candlestick indicates the range between the opening and closing
price. Traditionally this block is called the “real body”.

Typically, if the real body is filled in, or darker in color the currency closed
lower than it opened, and if the real body is left unfilled, or usually a lighter
color, the currency closed higher than it opened. For example, if the real body
is white or another light color, the top of the real body likely indicates the close
price and the bottom of the real body indicates the open price. If the real body
is black or another dark color, the top of the real body likely indicates the open
price and the bottom indicates the close price (I used the word “likely” since
you can make the real body whatever color you want).

Here’s an example of the same chart used in the line and bar chart examples
above, as a candlestick charts:
:
 Why Candlestick Charts are best for Price Action Trading

For the following reasons and more, most professional traders use candlestick
charts…

A candlestick chart provides traders with a quick view of overall market

sentiment via the colored real bodies of the bars. If a market is very bullish,
you will see a lot of white (or whichever color you choose) real bodies, if it’s
very bearish for example, you’ll see a lot of black real bodies, this is one big
advantage of candlestick charts. The dramatic visual contrast from one
candlestick to the next, enables traders to more easily spot price action
strategies (https://priceaction.com/price-action-university/strategies/) and
visualize the di"erences in dynamics between price bars in a significantly
easier and more enjoyable manner than using standard bar charts.

It’s very important that you use the correct candlestick charting platform, as
not all are created equal. The Forex market closes each day following New York
trading, at 5pm New York Eastern time. Also, there are 5 full trading days per
week in each major trading center around the world. Therefore, you want to
use candlestick charts with 5 daily bars per week (not 6 as some show) and
that reflect the actual Forex market closing time each day of 5pm NY time. You
can download them here.

I hope you’ve enjoyed this price chart tutorial. To learn more about price action
trading, visit the Price Action trading university (https://priceaction.com/price-
action-university/)

About Nial Fuller
Nial Fuller
(https://priceaction.com/contributors/nial-
fuller/) is a Professional Trader & Author who
is considered ‘The Authority’ on Price Action
Trading. (https://priceaction.com/price-
action-university/beginners/what-is-price-action/) He has a
monthly readership of 250,000+ traders and has taught over
25,000+ students since 2008. Checkout Nial’s Price Action Trading
Course here. (https://www.learntotradethemarket.com/forex-
trading-course)
:
 EDUCATION
Price Action Trading University
(https://priceaction.com/price-action-
university/)
Price Action Trading Strategies
(https://priceaction.com/price-action-
university/strategies/)
Nial Fuller – Professional Trader
(https://priceaction.com/contributors/nial-
fuller/)
What Is Price Action?
(https://priceaction.com/price-action-
university/beginners/what-is-price-action/)
Price Action – Home
(https://priceaction.com/)
Contact (https://priceaction.com/contact/)
:
RECENT POSTS CATEGORIES
Price Action Trading Video Tutorials Price Action Trading Articles
(https://priceaction.com/blog/videos/price- (https://priceaction.com/blog/articles/)
action-trading-tutorials/)
Price Action Trading Videos
Why Price Action Leads The News (https://priceaction.com/blog/videos/)
(https://priceaction.com/blog/articles/why-
price-action-leads-the-news/)
Why Price Action Strategies Will Simplify
Your Trading
(https://priceaction.com/blog/articles/why-
price-action-strategies-will-simplify-your-
trading/)
The Simplest Trading Strategy in the World
(https://priceaction.com/blog/articles/simple
st-trading-strategy-in-the-world/)
What Is The Best Price Action Trading
Strategy?
(https://priceaction.com/blog/articles/what-
is-the-best-price-action-trading-strategy/)
(htt
ps:// 
ww (htt
w.fa ps://
ceb twitt
ook. er.c
com om/
/pric pric
eacti eacti
onc onc
om) om)
Price Action (https://priceaction.com/) All rights reserved.