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CFDs are complex instruments. 70% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 70% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

How to trade using charts

Charts can provide traders with valuable information about an asset’s price, and help them make predictions about future movements. Here, we outline the basics of trading charts and give a few examples to illustrate how they work.

Chart data Source: Bloomberg

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.

Example of a trading chart Source: IG charts

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.

Sideways trend

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.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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