Different Forex Charts – Pros and Cons

Unfortunately, Forex charts are not the holy grail. Line charts, Bar charts, Candlestick Charts and Heikin Ashi definitely ain’t no Ed Sheeran song.  They ain’t perfect. And just like any other tool used for technical analysis, Forex trading charts are super useful but they do have some weaknesses or limitations.

In our previous lessons, we have covered each type of forex chart in detail and explained how to read forex charts and use them on a forex trading platform to analyze the forex market and predict the future price movement of currency pairs.  But now, it’s time for you to decide what is the best forex chart for you to use.

So, let’s go over the advantages and disadvantages of each type of forex chart together. 

Line Charts – Pros and Cons

Advantages of a line chart

✅ A line chart is the most basic, simple, and clear type of a Forex chart

✅ Easy to understand for novice traders

✅ Useful for quick identification of the trend of a currency pair

✅ A line chart excludes all market noise

✅ Suited for updates on developments when you are on the go

✅ Easy to identify support & resistance levels and graphical models

Disadvantages of a line chart

❌ Insufficiently informative and does not contain complete information compared to other technical analysis charts

❌ Only suitable for the superficial study of price 

❌ Many price movements are overlooked

❌ Uses the closing price only

❌ Does not show price extrema – no opening and closing prices like on other trading forex charts

Best for: Novice traders, long term position traders

Bar Charts – Pros and Cons

Advantages of a bar chart 

✅ An upgraded version of line charts

✅ Offers a range of useful information including opening and closing prices on a specified timeframe

✅ A bar chart shows all four prices over a certain time period – high, low, open, and close prices of the currency pair

✅ Simple to search for simple technical analysis patterns in shorter time frames

✅ Visually compact and exact, which allows forex traders to analyze the current market situation, trends, and price levels

Disadvantages of a bar chart

❌ Visually not as easy to read as a candlestick chart or a line chart

❌ No explicit coloration – no green and red candlesticks, for example

❌ Visually less convenient to determine whether the asset prices have grown in value over a certain period or have fallen

❌ Can be hard for a newbie to understand which bar is growing and which is falling

❌ Not all technical indicators work well on a bar chart

❌ A bar chart is not available on all trading platforms

Best for: New and intermediate forex traders

Candlestick Charts – Pros and Cons

Advantages of a candlestick chart

✅ A candlestick chart is considered the most convenient and popular among forex traders

✅ Most analysts in the forex market use candlestick charts to present forex chart analysis

✅ Highly informative price chart

✅ Visually easy to read and use in forex trading

✅ Displays the full information of each time frame – meaning opening price, closing price, high price, and low price

✅ Offers a deeper insight into price action and helps traders to predict future prices

✅ Flexible and can be used alone or in combination with other technical analysis tools

✅ Unlike other forex chart types, candlestick charts are available on any forex trading platform

Disadvantages of a candlestick chart

❌ Doesn’t show the exact price movements of a currency pair or the traded financial instrument

❌ Doesn’t present the bigger picture

❌ Fewer candlestick charts on the screen in comparison with bar charts, which means that you have less information to do forex charts analysis

❌ Comes with a gap

❌ Does not tell you which came first, the high or the low

❌ Doesn’t display the long-term trend and price momentum

❌ Looks different in every time frame and on various trading platforms

Best For: Scalpers, day traders, and swing traders

Heikin Ashi Charts – Pros and Cons 

Advantages of Heikin Ashi forex chart

✅ Slows down the speed of the market, eliminating unnecessary false signals

✅ Filters out the effects of excess volatility – the market sentiment can be easily recognized

✅ Offers a clear view of the chart and price data

✅ It makes many false signals and retracements disappear leaving you with rock-solid calls to action – easier to predict price trends and future price movement  

✅ Many forex traders prefer the Heikin Ashi forex chart as it smoothes out the price-action and market noise 

✅ Detects a strong trend that allows traders to stay in the trade without being nervous or making any unnecessary moves

Disadvantages of Heikin Ashi forex chart

❌ Does not show true prices in comparison to other forex chart types

❌ Obscures actual price information

❌ Does not fit short-term and scalping strategies

❌ May not be responsive enough for day traders or scalpers

❌ Not available on all trading platforms

Best for: Long term position traders

Final Thoughts

As you may have realized by now, there are various forex chart types, and choosing a Forex chart to trade with is a highly personal decision and depends entirely on the trader’s own circumstances, risk appetite, experience, and comfort level.

It is impossible to categorize any forex chart as categorically good or bad, but depending on your situation and the way you plan to trade foreign exchange currency pairs, choosing one over the other may contribute majorly to determining your success as a trader.

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