How to read a chart

A chart shows how the price of an instrument changes over time.
The horizontal axis shows time, and the vertical axis shows price.
Each point on the chart reflects the price at which trades took place at that moment. A chart shows only past price movement and doesn’t predict what will happen next.

A candle shows how the price changed over the selected period.

The main parts of a candle:
Open — the price at the start of the period.
Close — the price at the end of the period.
High — the highest price during the period.
Low — the lowest price during the period.

The body shows the difference between the open and close prices.
If the close is above the open, the price went up. If the close is below the open, the price went down.

Candle wicks:
Wicks (shadows) show how far the price reached during the period.
The upper wick shows the highest price, and the lower wick shows the lowest.

Timeframe — the period of time that one candle covers.
On M5, each candle is five minutes; on H1, one hour; on D1, one day.

The same market looks different on different timeframes. What looks like a sharp drop on a five-minute chart may be a barely visible dot on the daily chart.

• M1, M5, M15 — minutes. Lots of movement, lots of random noise.
• H1, H4 — hours. The overall picture of the day is easier to see.
• D1, W1 — days and weeks. The big picture; moves develop slowly.

Next, look at the overall direction. There are only three states, and you can tell them apart by the highs and lows.

• Uptrend — each new high and low is higher than the previous one.
• Downtrend — each new high and low is lower than the previous one.
• Range — the price moves between two levels with no overall direction.

Level — a price at which the movement has already stopped or reversed more than once. Levels are drawn from past reversals, and they don’t work like a wall: the price breaks through them regularly.

1. Select the trading instrument you need.
2. Open the instrument’s chart.
3. Choose a suitable timeframe. H1 is a good place to start.
4. See how the price is moving: up, down or in a range.
5. Note the nearest price levels.

This is enough to get a general idea of the current price movement.

• It doesn’t show what the price will be next.
• It doesn’t guarantee that the current movement will continue.
• It doesn’t determine where the price will reverse.
• It doesn’t replace risk management in trading.

A chart helps you assess current and past price movement, but it gives no guarantee of what will happen next.

• Horizontal axis — time, vertical axis — price.
• A candle shows the price at the start and end of a period, as well as its highest and lowest values.
• The timeframe determines what period of time one candle shows.
• The price can rise, fall or move in a range.
• A chart shows price movement that has already happened and doesn’t guarantee that it will continue.