Types of Gold Trading Charts
When it comes to gold trading there are three types of charts that traders can use to trade Gold.
Charts are graph representations of the price movement that are drawn on a grid and they can be drawn using different chart time frames such as 1 minute charts, 5 minutes charts, 15 minutes charts, 1 hour, 4 hour, daily, weekly and monthly chart time frames.
A trader will choose the chart time frame to trade with depending on their style of trading for day traders they will choose the 15 minutes charts and scalpers will use the 1 minute charts, swing traders will use the hourly trading charts.
These charts can be drawn using different chart representations, these are:
- Line Charts
- Bar Charts
- Candlesticks Charts
Line Charts
The line chart is a single continuous line drawn to represent the closing price, if a trader is using the 5 minutes charts then the closing price for every 5 minutes is drawn and connected to the next close of the next 5 minutes therefore this forms a continuous line that forms the line chart.
This chart type leaves out a lot of information about the gold price movement; this chart only draws the closing price and leaves out the high price, the low price and the opening price. Because of this the line chart is not very popular among gold traders - gold traders instead prefer to use other chart types such as the bar charts and candlesticks charts that include this information on their chart representations.
Bar Chart
Bar charts will plot all the information about price information - this information is known as OHCL - Opening price, High of Price, Closing Price and Low of Price.
This information is represented in the form of a bar. The bar charts have 2 different colors; these are red for when prices move down and blue for when price moves up, the bar chart is shown below.
These bar charts plot all the price information as shown above. The vertical bar represents the total price movement, the left horizontal bar shows the opening price and the right horizontal bar shows the closing price, the highest and lowest points represent the high of price and low of price respectively.
These charts are not very visually appealing when drawn close together as shown below and for this reason these bar charts are not commonly used when trading gold.
Candlestick Charts
These are the most commonly used types of charts - these chart show all the information of price - OHCL in an easy to interpret format.
The candlestick charts are of two different colors, red for when the price moves down and blue for when the price moves up.
These candlesticks charts look like candles with wicks on both sides. The body of the candlestick shows the difference between the opening price and closing price. The high and low which are represented by what is known as the shadow this is the part that looks like candle wicks represents the highest price and lowest price.
An example of how gold trading charts look is shown below:
This is the most commonly used trading chart when it comes to trading gold.
To select between any of these chart types on the trading platform a trader can use the buttons shown below.
A trader can switch between different chart types using the above buttons when trading the gold market.