Sigma Trader

Meta Trader 4

Get Crowned

Join our monthly trading contest

INTRODUCING BROKERS

trading school

What are charts?

A chart or graph is a type of information graphic or graphic organizer that represents tabular numeric data and/or functions that it is a graph of the price movements of a given security over a given time period, sometimes along with volume data.
Charts are often used to make it easier to understand large quantities of data and the relationship between different parts of the data.
Certain types of charts are more useful for presenting a given data set than others.
The charts are one of the main interests at Sigma.
Charts are a statistically noticeably technical analysis tool for a trader that wants to carry out successful trading.
Currency charts bring clearly a single period of time and that period could range from one minute to one month to several years.
Charts are the main tool that technical analysts use in order to plot data and predict prices.

According to the above chart,
Y axis represents prices
X axis represent period which can be customized within that range: M1, M5, M15, M30, H1, H4, D1, W1 and MN where M is minuets, H is hours, D is days, W is week and MN is months.
The fluctuations in the chart based on the demand & supply in the market & for that the technical analysis made to predict the next events by using different indicators.
Most of traders use daily charts & intraday date to forecast short-term price movements.
Most of investors use weekly & monthly charts to forecast long-term price movements.
Others might use combination between short-term & long-term charts.

What are support, resistance & trend?

Support: is the price level at which demand is strong enough to prevent the price from declining further.
Resistance: is the price level at which selling is strong enough to prevent the price from rising further.
-    There is no support without resistance & there is no fixed support or fixed resistance in which each support can be a resistance next period by breaking prices below a support level, the broken support level can turn into resistance & Visa versa.
-    It’s very difficult to predict the next support or next resistance

Trend: A trend line is a straight line that connects two or more price points and then extends into the future to act as line support or resistance. There are three cases
Uptrend: is a connection between two or more low prices in which the second price must be higher tan the first price (It acts as support line).
Downtrend: Is a connection between two or more high prices in which the second must be lower than the first price (It act as resistance line).

What are types of charts?
There are three types of charts in Sigma platform:
1) Bar Chart: It’s a style of chart used by some technical analysts where the top of the vertical line indicates the highest price a security traded at during the day, and the bottom represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is shown on the left side of the bar. A single bar like the one below represents one day of trading.

2) Line chart: It’s a style of charts created by connecting series of points together in a line.
It’s the most popular chart but has less use by the technical analytics.

This chart does not show what happened during the time unit selected by the viewer, only closing rates for such time intervals. The line chart is a simple tool for setting support and resistance levels.

3) Candlestick Chart: It’s the oldest types of charts developed in the 18th century by legendary Japanese rice trader Homma Munehisa, this style of charting is very popular due to the level of ease in reading and understanding the graphs.
Each candlestick includes the open, high, low, and close, of the timeframe, and also shows the direction (upward or downward), and the range of the timeframe.
Below are examples of candlesticks and a definition for each candlestick component:

There are different names for signals in the candlestick chart:

1) Long Day:
In this pattern you will find great difference between the open & close price

2) Short Day:

In this pattern you will find small difference between the open & close price

3) Marubozu:

Marubozu do not have upper or lower shadows and the high and low are represented by the open or close.

4) Long & short shadow:

Short shadows indicate that most of the trading action was confined near the open and close.
Long shadows show that traded extended well past the open and close.

5) Spinning Tops:

One long shadow represents a reversal of sorts; spinning tops represent indecision.

The small real body (whether green or red) shows little movement from open to close and the shadows indicate that both bulls and bears were active during the session.

6) Doji

Prices move above and below the opening level during the session, but close at or near the opening level. The result is a standoff. Neither bulls nor bears were able to gain control and a turning point could be developing.

7) Star & Rain drops Position:

A Star appears when a small body gaps above the previous day's long body. Stars are part of more complicated candlestick patterns, especially the reversal patterns.

A Rain Drop appears when a small body gaps below the previous day's long body. Rain Drops are part of the more complicated patterns, especially the reversal patterns.

8) Harami Position:

A candlestick that forms within the real body of the previous candlestick is in Harami position.
The shadows (high/low) of the second candlestick do not have to be contained within the first, though it's preferable if they are.

9) Hammer & Hanging Man:

The Hammer is a bullish reversal pattern that forms after a decline also hammers can mark bottoms or support levels.
The Hanging Man is a bearish reversal pattern that can also mark a top or resistance level.

10) Blending candlesticks: