What a chart shows
A trading chart is a record of past prices. Time runs along the bottom, price runs up the side, and each mark on the chart shows what price did during a slice of time. A chart does not show what price will do next. It only shows what has already happened.
Most forex charts on retail platforms such as MT4 and MT5 are built from the bid price, the price at which you can sell. The ask price, the price at which you can buy, sits slightly above it, and the gap between them is the spread. If you are new to these terms, see Bid and ask and What is spread.
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The axes
- Horizontal axis (time): each step is one period of the chosen timeframe. Weekend periods are usually skipped, so Friday's last candle sits right next to Monday's first. Any jump in price between them is a price gap.
- Vertical axis (price): shows quotes in the pair's own units. On most pairs the last digits are pips and pipettes. See What is a pip and Pips, points, pipettes.
- Server time: platform charts use the broker's server time, not Pakistan time. The daily candle opens and closes by server time, so check what time zone your platform uses before comparing charts.
Line, bar and candlestick charts
Line chart
A line chart joins the closing prices of each period. It is clean and shows the general direction well. It hides the highs and lows inside each period.
Bar chart (OHLC)
Each bar shows the open, high, low and close for the period. The vertical line runs from the low to the high. A small tick on the left marks the open, and a tick on the right marks the close.
Candlestick chart
A candlestick chart shows the same open, high, low and close, drawn in a way most people read faster.
- Body: the thick part between the open and the close.
- Wicks (shadows): thin lines above and below the body. They reach the high and the low of the period.
- Colour: one colour when the close is above the open (price rose), another when the close is below the open (price fell). Colours vary by platform and can be changed, so do not assume green always means up.
How to read candlesticks, step by step:
- Find the colour and see whether price closed above or below where it opened.
- Look at the body size. A large body means price moved far from open to close. A small body means open and close were near each other.
- Look at the wicks. A long upper wick means price went higher but came back down before the close. A long lower wick means price went lower and came back up.
- Compare the candle with the candles around it. A single candle means little on its own.
For named shapes, see Candlestick patterns.
Timeframes
The timeframe is how much time each candle or bar covers: minutes, hours, days, weeks or months. The same market can look like it is rising on the daily chart and falling on an hourly chart. Neither view is wrong. They simply cover different periods.
A common approach is to start with a higher timeframe to see the broader picture, then move to a lower one for detail. Lower timeframes show more noise, meaning small moves that often reverse. More detail is in Timeframes.
Volume
On exchange-traded markets, volume is the number of shares or contracts traded. Spot forex is traded over the counter, with no single central exchange, so there is no complete market-wide volume figure. MetaTrader shows tick volume instead, which counts how many times the price changed during the period. Tick volume often rises when activity rises, for example when trading sessions overlap or news comes out, but it does not measure money traded. See OTC vs exchange and Liquidity.
Price scale
- Auto scale: the platform fits the visible candles into the window. When you scroll, the scale changes, which can make a small move look large.
- Fixed scale: you set the price range yourself, so the visual size of moves stays comparable as you scroll.
- Linear vs logarithmic: on a linear scale, equal price distances look equal. On a logarithmic scale, equal percentage moves look equal. Log scale is used mainly for long-term charts of stocks, indices or crypto, where prices change a lot over time.
Before judging a move by eye, check the price axis and measure the distance in pips or price units.
A first look at trend and range
Trend
- Uptrend: price makes higher highs and higher lows. Each pullback stops above the previous low.
- Downtrend: price makes lower highs and lower lows.
- A trend is only a description of the past swings on the timeframe you are viewing. It can end at any time, often without warning.
Range
In a range, price moves sideways between a lower area where it has turned up before (support) and an upper area where it has turned down before (resistance). Treat these as zones, not exact lines, because wicks often poke through them.
A simple routine for your first look
- Pick a higher timeframe and switch to a line chart to see the general direction.
- Mark the recent swing highs and lows.
- Decide whether they step up, step down, or move sideways.
- Switch to candles and look at how price behaves near those swing points.
- Note the volatility: are candles getting larger or smaller?
This routine helps you describe a chart. It does not tell you to buy or sell, and no reading of a chart is reliable enough to remove risk. Shapes formed by many candles are covered in Chart patterns, and wider methods are covered in Technical analysis.
Practise without real money
Reading charts takes practice. A demo account lets you open charts, change timeframes and scales, and draw lines without risking money. See Demo account and First demo trade.
Leveraged forex and CFD trading can lose money fast, and a well-read chart does not prevent that. Read Risk management and Why traders lose before trading with real funds. Also note that Pakistani regulators have published their own position on offshore trading platforms. See Law and regulators.
Frequent questions
Which chart type is better for beginners?
Line charts are the simplest for seeing direction. Candlestick charts show more, because they display the open, high, low and close. Many people start with a line chart and then move to candles.
Why do two platforms show slightly different candles?
Each provider has its own price feed and server time. Daily candles can open and close at different moments, and quotes can differ slightly.
Is tick volume the same as real volume?
No. Tick volume counts price changes, not the amount traded. It can reflect activity, but it is not a measure of money traded.
Does a green candle mean price will keep rising?
No. It only shows that price closed above its open in that period. What happens next is not shown on the chart.
What timeframe should I use?
There is no correct timeframe for everyone. Compare a higher and a lower timeframe to see both the broader direction and the detail. Start with Timeframes.
Where can I look up chart terms?
See the Trading glossary.