Charts demonstrate the price movement of an asset and are used in technical analysis to identify and monitor trends, decide on entry and exit points, and spot price reversals. Let’s have a look at all of the chart types available on Pocket Option.
The line chart is considered to be one of the most basic types of charts and works by connecting price points using a line continuously over time. A line chart is easy to understand and it tends to reduce noise during trading; it is often used in combination with support and resistance levels, as well as trendlines, and can be used to identify turning points of a price trend and overall price directions:
The Candlestick chart shows price information over a certain time period; each candle is made of a body part and a wick (also referred to as ‘shadow’). The upper and lower bounds of the body show the opening and the closing price while the wick on either end of the candle shows maximum and minimum prices.
A longer body of a candle likely indicates a trend that is intensifying and a short body may signal the current trend coming to an end; long wicks on either side may signal a possible reversal. The candlestick is green when the opening price is lower than the closing (bullish candle) and red when the opening is higher than the closing (bearish candle). Color coding often facilitates the process of comparing closing and opening levels and identifying price reversals. Pocket Option also allows you to customize the color of the candles, choose a shadow style that suits you the best as well as select the time periods of candles to fit your chosen trading time frames. For example, a 1-minute candlestick contains information on the price change over that time, but you can choose other available periods:
Bar Charts are in a way similar to candlesticks and consist of vertical lines with short perpendicular lines on both ends of each bar, one on the left and one on the right. Vertical lines indicate the price range between high and low (the minimum and maximum price), while perpendicular lines indicate opening and closing prices. The opening price of the asset is the small horizontal line on the left side of the bar and the closing price is the line on the right. Like other types of charts on Pocket Option, a bar chart is color-coded, and when the opening price is below the close price, the bar is green, and if the open is above close then the bar is red.
Bar charts can also help monitor the price volatility of the asset. A long vertical bar means there is a large difference between the high and the low price of the asset and indicates higher volatility over that period and vice versa.
Just like in the case of candles, you can always color customize bars on a chart and choose the time period.
Hiken Ashi looks like a candlestick chart, but instead of tracking individual price points, it takes an average of a group of price points and shows them in form of a bar. Heiken-Ashi is likewise based on open, close, minimum, and maximum prices, but is calculated through a different formula that includes averaging to calculate these prices. In that way, Heiken Ashi aims at reducing some of the price noise and facilitating the process of identifying the direction of a trend. Just like in the case of a bar or a candlestick chart, you can choose the time period and color-coding that suits you the best.
Interpretation of Heiken Ashi is similar to candlesticks; a small body with long wicks may signal price reversals and long bars may indicate trend strengthening.
Which one to use?
There are several differences between all of the chart types on Pocket Option. Line charts are easy to read but due to their simplicity, it is often difficult to identify trends and patterns or see price ranges using them; they can, however, be used to identify support and resistance levels. Heiken-Ashi smoothes out price information as it essentially calculates average price values; but because of this, some valuable price data may be lost. Also, a normal candlestick demonstrates the current prices of the asset that is being traded, but since Heiken Ashi is based on an average the prices it shows may not match the actual values. Candlesticks are used quite often by traders as they tend to be a great analytical insightful instrument that can be combined with many different trading indicators; they are however more noisy than for example line charts. Certainly, in the end, the chart you choose to use should suit your trading strategy and skills.
Hopefully, now you have a better idea of the different types of charts available on Pocket Option. Do not forget to practice using them on a demo account and best of luck!
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