Top Three Trading Charts Explained - Reading time: about 3 minutes
The trading chart is a vital tool which provides a wealth of trading information at a glance. Cryptocurrency traders use trading charts to track historical price movements of various tokens and market trends in a bid to identify the best entry and exit points for trades. Although these charts may seem intimidating for the first-time trader, in this article we will break down the different types of trading charts and how to make sense of all the data that a typical crypto trading chart might present.
Trading charts essentially allow crypto traders to analyze and compare the performance of a token over a specific time period. They provide information on trading volume, market capitalization, as well as trends or patterns that emerge over time.
Traders can use these charts in combination with technical analysis tools, such as moving averages and oscillators, to make informed trading decisions.
Different Types of Crypto Trading Charts
There are several types of cryptocurrency trading charts that traders may use, such as line charts, bar charts, and candlestick charts.
Line charts are the simplest. They are created by connecting a series of data points with a line. These charts can be used to identify trends and resistance levels.
Bar charts show the open, high, low, and close prices for a cryptocurrency over a specific time period as vertical bars. Bar charts are similar to line charts, but they also include vertical bars to represent the high and low price for a given time period. The length of the bar represents the price range for the time period, with the bottom of the bar representing the low price and the top representing the high price.
Candlestick charts also show the open, high, low, and close prices for a cryptocurrency, but in addition, they highlight the relationship between the open and close prices by using different colors for bullish and bearish candles. The body of the candlestick represents the price range between the open and close prices, while the wicks of the candlestick represent the high and low prices for the time period.
Candlestick Charts For Crypto Trading
Out of the three chart types discussed in this article, candlestick charts are arguably the most popular type of chart, used by traders to visualize price movements of various financial instruments such as stocks, currencies, and commodities.
Crypto trading charts typically follow the candlestick format in conjunction with other chart types. Some of the reasons why traders may use candlestick charts include:
1. Candlestick charts provide a clear and concise visual representation of price action. They show the opening and closing prices, as well as the high and low prices for the time period being charted. This makes it easy for traders to quickly identify patterns and trends.
2. Candlestick charts can help traders identify key levels of support and resistance. These levels are areas where the price of a financial instrument may be more likely to bounce off of or break through.
3. Candlestick charts can help traders identify potential buying and selling opportunities. Different candlestick patterns can signal bullish or bearish sentiment, and traders can use this information to inform their trades.
4. Candlestick charts are widely used and well-known among traders, so they can be a useful tool for communicating with other traders and analysts.
Overall, candlestick charts are a valuable tool for traders looking to visualize and analyze price movements in financial markets.
Which Crypto Trading Chart is Best?
A view of the ProBit Global trading dashboard presents you with a combination of the bar graph and candlestick graph. By hovering over a specific point on the graph you can note the opening, high, low, and closing prices, along with the volume traded. Switch to Trading View and you will once again notice various options for different graph types, with the candlestick chart taking center stage. ProBit Global has designed various elements of our trading dashboard to provide ultimate flexibility and customization, including the trading chart.
Traders can choose which chart type suits their needs, based on the amount of technical analysis they might need to conduct. For many traders, however, the candlestick chart remains the Gold Standard for tracking crypto trends and identifying patterns to help them successfully execute their trades.