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 charts are super useful but they do have some weaknesses or limitations.

Let’s go over these advantages and disadvantages together. 

Line Charts – Pros and Cons

Advantages of Line Charts

✅ Most basic, simple and clear type of a Forex chart

✅ Easy to understand for novice traders

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

✅ 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 Line Charts

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

❌ Only suitable for the superficial study of price 

❌ Many price movements are overlooked

❌ Uses the closing price only

❌ Does not show price extrema and opening prices

Bar Charts – Pros and Cons

Advantages of Bar Charts 

✅ An upgraded version of line charts

✅ Offers a range of useful information

✅ You can see all four prices over a period

✅ Simple to search for simple patterns in shorter timeframes

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

Disadvantages of Bar Charts

❌ Visually not as easy to read as Candlestick charts

❌ No explicit colouration

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

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

Candlestick Charts – Pros and Cons

Advantages of Candlestick Charts

✅ Considered the most convenient and popular among traders

✅ Highly informative

✅ Visually easy to read

✅ Displays the full information of each time frame

✅ Offers a deeper insight into price action 

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

Disadvantages of Candlestick Charts

❌ Doesn’t show the exact price movements

❌ 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 an analysis

❌ Comes with a gap

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

❌ Doesn’t display the long-term trend

❌ Looks different on every time frame

❌ Laggs an indicator

Heikin Ashi – Pros and Cons 

Advantages of Heikin Ashi

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

✅ Filters out the effects of excess volatility

✅ Offers a clear view of the chart 

✅ It makes many false signals and retracements disappear leaving you with rock solid calls to action

✅ 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

❌ Does not show true prices

❌ Obscures actual price information

❌ Does not fit short-term and scalping strategies

❌ May not be responsive enough for day traders or scalpers

As you may have realised by now, 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 categorise any chart as categorically good or bad, but depending on your situation, choosing one over the other may contribute majorly in determining your success as a trader.