This article looks at designing forex charts.
In order to be a successful trader you must have a strong understanding of your foreign exchange trading system and aspects thereof. If you are using technical analysis this will include forex charts. The forex chart acts as a graphical representation of market movement information, which allows for an easier analysis of the foreign exchange market. However, the chart must be well-designed as usage of this data is completely dependent on personal interpretation; therefore, the overall presentation can affect your affect your trading enormously.
For example, you might have all the correct information available but are not able to interpret the data quickly enough to make the trade. This will lead to a lost opportunity and lost potential profits. It is vital that the forex charts you use are easy to navigate, while displaying the correct amount of information. They must also be able to adapt to the market conditions. This article will look at the different aspects to consider when using an effective forex chart.
Colours on a forex chart
The majority of charting platforms present with a plethora of charting colours; however, it is recommended that one stick to neutral or monochromatic colours as these are simpler and less anxiety-inducing. The most popular colour combinations are red, green and black or white, grey and black. Of course, one should experiment with different combinations to determine which is most pleasing to your eyes as you will be dealing with these forex charts for several hours on a daily basis.
It is advised that the price bars and indicators stand out in contrast to the chart background. In the chart below, the down price bars are in red and the up price bars are in green showing a striking contrast against a black background. If you choose a black and white colour scheme one could use a gray background to create the contrasting effect. This contrast is recommended as the price bars and indicators are the most important aspect of the chart.
Another recommendation is using separate colours for different orders. This will allow you to easily identify the different orders placed.
Layouts on forex charts
An effective ‘workspace’ is generally comprised of forex charts and market information displayed on a trading computer monitor. It has been noted that having more than one monitor adds to effectiveness as one can monitor order entries and chart analysis simultaneously. Many traders can become overwhelmed by the amount of information required for analysis, and this is why it is important to remove all unnecessary information for your forex charts. This takes some trial and error before you get it right, but by removing irrelevant items will allow focus on the more significant items.
The numbers and texts on a forex chart
In addition to the correct colours and amount of information on a chart, you must also have the appropriate font. This may seem redundant but a bold and crisp font makes numbers and text easier to read and remember. One should use a subdued text for the less important items such as a trading strategy title as the likelihood of you requiring this information are rather slim. However, the prices appearing on your chart’s axis should be strong as this information is very important to your trading.