The Bar Graph
The bar chart is a popular type of plotting price quotations which is also used in terminals for trading binary options.
This variant of quotations shows us a vertical line with the points of the opening and closing price over a specified time interval.
Currently, the construction of the specified type of price is less popular in comparison with line and candle charts. However, the bars are also often used for the technical analysis of price movements of a financial asset.
Bar graphs are most commonly used in the trade terminals MT4 and MT5, but they are virtually absent in the web terminals through which the vast majority of binary options are traded.
What does the Bar Chart Give us?
First of all, this type of quotations construction shows very clearly the amplitude of the price fluctuations of the financial asset over the specified by the trader or pre-brokerage company time interval (timeframe). Thus, it is possible to determine the price volatility of the asset and the nature of its motion direction. The bar chart is used in trading on patterns in which graphical models of construction are estimated by the cost of various figures, as well as in trading on the breakdown of price levels.
Construction of the Bar Graphs
The construction of the bars on the chart is done in the following way. For example, we trade on the chart with a time interval (timeframe) H4. Thus, every 4 hours a new bar appears on the chart. The price level which is in the point of the bar appearance is called the opening price (it is denoted as Open), the level at which the bar is closed- the closing price (it is denoted as Close). The levels of price deviation from the place of the opening are High and Low bars.
Thus, the bar chart provides the trader with all the necessary information for analysis of the financial asset graphs and it is an informative tool for technical analysis. In addition, the display of quotations reflects the mood of the price more plausibly in comparison with linear graphs.