When it comes to technical analysis of binary options, bar charts are just one tool among many. Most traders are looking for a chart that can display both significant amount of important data and information needed for executing trades that have short expiry times. While bar charts offer a slightly different view than line charts, they still depict tremendous information. The key is knowing how to use them and what to use them for.
The layout of a bar chart is quite simple. When looking at a bar chart, you notice that the time is displayed on the x-axis, while the price appears on the y-axis. For example, on a 5-minute bar chart, each bar represents 5 minutes. On a daily chart, each bar will represent a day. When comparing bars, the higher bars indicate higher prices. Normally we read bar charts from left to right.
Each bar shows what action the prices have taken during the period the bar represents. With this in mind, you can change the chart settings to display the price movement for the time period you would like to see.
If you choose a 5-minute bar chart, it will show you how the price moved every five minutes for the day. Depending on where your chart is coming from, you might even see price changes every five minutes over more than a day. The charts can also be set to show opening, high, low, and closing prices, if you wish.
Every line of the bar chart reflects a specific price range. The lowest point of the line reflects the lowest price of an asset. Likewise, the highest point of the line depicts the highest price of the asset. When you are looking at a 24-hour bar chart, you can see the highest and lowest prices of the period at a glance. Any binary options trader will benefit from having this information so easily accessible.
On a bar chart, you will also see two horizontal dashes connected to the vertical lines, one on each side of the chart. The dash on the left shows the asset’s starting price for the period, while the dash on the right reflects the asset’s closing price.
Put all this together and you have an information packed chart that is easy to read even for someone new to trading.
There are many technical tools available to help traders analyze assets. Most brokers offer some tools, yet it is possible to find many free tools online. The MT4 chart offers a great deal of information, but no single tool will do everything for you, so look for a combination of tools and strategies to help you succeed with binary options trading.