How to trade using charts

What are trading charts?

Trading charts are the graphic representations created by an asset’s price movements over time, which are used by traders as part of their technical analysis. These charts can create recognisable patterns that enable traders to gather information about what the price of forex pairs, shares, indices – and other markets – might do next. Though it is not entirely possible to predict how a market will behave, it is a common belief that chart patterns tend to repeat themselves.

There are several different types of trading charts, but they all show similar trading information, such as the past and current prices. The most popular types of trading chart are line, bar and candlestick charts. Below is an example of a candlestick trading chart for GBP/USD; it represents the price highs and lows for the currency pair over a specific time frame.

Want to learn more? Join IG Academy to access a free course on the basics of technical analysis.

How to trade using charts

To trade using charts, you can use the tools available on a wide variety of trading platforms, such as our web-trading platform and mobile apps, ProRealTime and MetaTrader 4. Our web-trading platform, for example, offers smart charts to help you analyse price performance across different timeframes. It also enables you to deal in an instant – direct from the charts. You’ll be able to open, close and edit positions in just a couple of clicks.

See how charts work on our different trading platforms

Trading charts always feature distinct patterns that technical analysts can use to interpret the behaviour of buyers and sellers. These patterns are the essential parts of a chart that can give traders an indication of where the market could go next. As you'll notice when you look at a chart, the market will usually move in one overall direction or trend. There are three types of market trend: uptrends, downtrends and sideways trends.

With IG’s web trading platform and app, you can perform in-depth analysis of the charts with 28 indicators (including moving average convergence divergence (MACD), relative strength index (RSI) and Bollinger Bands). You’ll also get 19 drawing tools that you can use to highlight key trends, patterns and levels. To start trading with charts, follow these steps:

1. Open an IG trading account or log in to your existing account
2. Search and select the asset you are interested in trading
3. Click the ‘add to workspace’ button for easy access to your chart every time you log in
4. Use the indicators and drawings to analyse the chart
5. Place your trade in the deal ticket

What to bear in mind before trading with charts

• Analysing charts form part of technical analysis, but charts should never be viewed in isolation when making a trading decision
• Combine chart analysis with fundamental analysis and refer to your trading plan before opening any positions
• While trends and chart patterns could be indicative of future price movements, they are not guaranteed
• You can try chart trading on a risk-free IG demo account and get £10,000 in virtual funds

Start trading with charts on a live trading account or create a demo account today.