"Charts speak a special language; those who understand it hear the market's voice before others" - this wisdom was learned by Ahmed Essam after years of trading. At first, charts looked to him like random lines; today, they have become a treasure map revealing profit opportunities before they appear to the public.
Imagine you are watching a silent movie - you can see the events but cannot hear the dialogue. This is how those who do not understand charts trade. They see price movements but do not understand the whole story.
A chart in its simplest form is a visual representation of an asset's price movement over time. The horizontal axis represents time, and the vertical axis represents price. But these lines are not just numbers - they reflect the behavior of millions of traders, a story of fear, greed, hesitation, and confidence.
The simplest type of chart is the Line Chart - a continuous line connecting closing prices. Simple and easy to understand, ideal for beginners and a general overview of the trend.
The most common is the Candlestick Chart - each "candle" represents a time period (day, hour) and shows the opening price, closing price, highest price, and lowest price. A green candle means the price went up, and a red candle means it went down.
Sarah, a math teacher who became a trader, says: "When I started, I only focused on the color of the candle - green or red. Over time, I learned to read the 'shadows' of the candle - the thin lines above and below the body of the candle - which reveal the struggle between sellers and buyers."
To understand the market trend initially, you should look for:
*Uptrend: A series of ascending peaks and troughs. Like climbing a ladder - each step higher than the previous one.
*Downtrend: A series of descending peaks and troughs. Like going down stairs - each step lower than the previous one.
*Sideways Trend: Horizontal movement between two levels, like walking in a narrow corridor.
Jesse Livermore, one of the greatest traders in history, says: "Markets never change. Fear, greed, hope, and avarice have not changed since people began trading."
Practical advice: Start with larger timeframes (weekly, daily) to understand the overall trend, then move to smaller timeframes (hourly, 15 minutes) to identify entry and exit points.
Fadi, a former engineer, shares his experience: "I would spend hours analyzing five-minute charts, only to find that the overall trend was down on the daily chart. It was like trying to swim against the current."
Remember that charts are a tool, not a magic ball. Use them alongside other tools like technical indicators and fundamental analysis.
Charts tell you what has happened, not what will happen, but understanding what happened is the first step to predicting what might happen.
In the next post, we will delve into the concept of supply and demand and an introduction to the science of trading in the crypto market. Are you ready to understand the fundamental driver of price movements?
