When it comes to forex trading, you must have the understanding of studying bar charts. These are the most popular graphical representations, the other being candlestick charts. In order to make your trade smooth, it is important that you can read a single bar within a bar chart and learn how the bars within a chart interrelate with each other as it will give you a clear idea about the underlying market.

Reading single bar

Bar charts comprise of a number of individual bars. Each bar represents trading information for the chart time frame. Like, in a 10 minute bar chart, each bar denotes 10 minutes of trading information. The information includes opening price of bar, high and low prices, closing or the last price, range of bar and direction of the bar. The information is represented graphically; you don’t need to calculate them and thus you can get the information almost instantly.

• Opening price – This is shown by a small horizontal line on the left side of the bar. This is the initial price traded during time-frame represented by the bar. It is often colored differently than rest of the bar.

• Closing price – This is shown by a small horizontal line on the right side of bar. This is the end price traded during time-frame represented by the bar. It is also colored differently than rest of the bar.

• High and low prices - The prices are shown by top and bottom of the bar. While high price is the highest price traded during the time-frame, low price represents the lowest price during the same time-frame. Look at the chart; high and low prices are drawn as yellow vertical lines.

• Range of bar – This is denoted by the length of the bar (length of the vertical line shown in the figure). It represents volatility of the currency price during time-frame depicted by the bar. While the bar is shorter than the previous bars, it denotes that the range or the volatility has been decreased. A bar longer than the previous bars denotes that the range or the volatility of the bar has been increased. You can calculate the range of a bar by subtracting the lowest price from the highest price of the bar.

• Direction of bar – This is portrayed by the relation between opening and closing prices of the bar. This can also be depicted by the locations of two small horizontal lines. Whether the price went up or down during time-frame can be understood by the direction of the bar. The bar will be an upward one, if the horizontal line of the closing price is higher than the horizontal line of the opening price. On the other hand, it will be a downward bar, if the horizontal line of the closing line is lower than the horizontal line of the opening price. The bar drawn in the example figure is an upward bar as red horizontal line is lower than the green horizontal line.

Having conception about the above-mentioned points would help you reading the bar charts well and thus ensure better trading.