Types of Charts
Following on from the basics of technical analysis, we saw that you were able to depict the data using different symbols like bars and candlesticks.
Now adding all of those various symbols together in the one chart, you are able to chart the price for a stock.
For example, the chart below is a bar chart representing the data for an individual stock over a period of time. In this case, the chart is a daily chart in that every single bar represents 1 day’s worth of trading.
This same stock data can also be represented using candlesticks. Below is candlestick chart for the same stock.
As mentioned previously, candlesticks can be coloured to assist us with working out whether the price has moved up or down. An example is shown below.
The simplest form of chart is a line chart. In this case, a single line is drawn and connects all the closing prices. Almost like ‘joining the dots’. As you may have concluded, a line chart does not show the opening, the high or the low prices for the period.
Again, here is the same stock now represented using a line chart.
The few examples mentioned above are not the only ways that people view data using charts. Other examples include:
- point and figure
- three line break
At the end of the day, it is all the same data. The only choice you need to make is which style appeals to you more. Which type of chart do you think will you be more comfortable reading?