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How to Read Trading Charts for Crypto

Traders in cryptocurrency markets often perform technical analysis on trading pairs like BTC/USD using the charts available on trading terminals like Quadency. Learn what trading charts are and how they work.

Contents




  • Trading charts explained
  • How to configure your charts
  • Ways to read charts
  • How Candlestick charts help identify patterns


What is a Trading Chart?

A trading chart provides data on a specific trading pair to help traders make decisions about when or when not to enter or exit a position.

”MATIC-USD” 2-hour MATIC/USD Trading Chart

Trading charts always feature the following elements:

  • Time frame
  • Trading Pair
  • Price scale

Historical data, such as recent trade volume and short- or long-term price movements, is available through the chart so the crypto trader can gain insights on future trends.

On top of that, trading charts also provide:

  • Technical analysis indicators
  • Drawing tools
  • Advanced price information, i.e. using open and close price data.

There are dozens of different technical indicators that can be applied to provide more context and as a way to better analyze the historical data. MACD, for example, is a trend-following momentum indicator that uses 2 or more moving average price lines and their point of convergence to help discover patterns or trends.

”ETH-USD-MACD="95%"1-Week Trading Chart for ETH/USDT with MACD Indicator Applied

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What are the different trading chart formats?

Trading charts can be formatted so the data is presented differently to provide additional insights or as a personal preference. There are three main types of charts with each of them having pros & cons

Line
Line charts provide a quick way to visualize a longer-term trend. They only display the price at the end of each period of time without including the price movement within the timeframe.

Candlesticks
Most simply, candlestick charts are used by traders to represent the price evolution of an asset using candle-like elements. They provide four pieces of data for each time period: the open, high, low and close.

”ETH-USD-MACD="95%"Chart type options from Quadency dashboard

Bar (OHLC)
These are similar to candlestick charts, they may be harder to understand initially, but they offer far more information than a simple line chart as well.

Focus on: Candlesticks Charts

Candlestick charting dates back to 1800th century Japan and is now widely used in both traditional and crypto asset trading to analyze price movements.

Learn how to use Fibonacci Indicators with Quadency today.

How to read a candle?

Each candlestick in the chart represents one trading period and the opening/closing price during that period.

  • A red candle signifies the price closed at a lower price than its opening price for the selected duration.
  • Conversely, a green candle means the price closed at a higher price than the opening price for the selected duration.
  • “Wicks”, also known as tails or shadows, show the highest and lowest price of a digital asset for the candlestick period. If there’s no wick, it means the open/close price was the low/high price.
Anatomy of a candle

How to use Candlestick charts:

There are a few ways to use trading charts:

  • Look for candlestick patterns that could lead to recurring price movements or a future price reversal.
  • Watch for trend lines across candles that might suggest a good time to enter or exit a position.
  • Manually place your orders by clicking on the chart to fill in the price automatically or to drag & drop your limit orders.
”quadency-drag-drop-order”Manage your orders directly on the chart

Conclusion

Using charts to analyze indicators and look for trends can help traders gain insight into crypto markets, for instance when a crypto asset is overbought or oversold, or when a trend reversal might occur.

To make the most of trading charts, be sure so use a trading terminal with the a high level of chart configurability and quality data across multiple exchanges, like Quadency.

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Quadency is a cryptocurrency portfolio management platform that aggregates digital asset exchanges into one easy-to-use interface for traders and investors of all skill levels. Users access simplified automated bot strategies and a 360 portfolio view with a free account.

Disclaimer: The content of this article is for general market education and commentary and is not intended to serve as financial, investment, or any other type of advice.