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ForeXecutor
| Charts flavors |
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| Written by Kimball Hall | |
| Tuesday, 07 October 2008 | |
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Charts come in three basic flavors: Candle Charts Bar Charts Line Charts Before we get started lets cover a few basics you will need to know. These include a few terms as well as what you will see when you start charting. 1. When you hear the word “bar” we are referring to data represented by a drawing. It is important to know that a bar can consist of one hour’s worth of price data or fifteen minutes worth of price data. Make sure that when you are charting you always know which time frame you are on. 2. When making decisions based on charting analysis, be sure you understand all of the data shown on the chart. You will see some charts not covered here in this introduction. It would be fool hardy to make trading decisions using a Heikin Ashi chart thinking it was the same as a candle chart. Candlestick Charts Since Candle charts tend to be the most popular in Currency trading let’s start there. Candle bars show the high-to-low range with a narrow vertical line. The fat block in the middle shows the range between the opening and closing prices. If the block in the middle is filled with red, then the bar closed lower than it opened. If the fat block is blue, it closed higher than it opened. The first candle below is filled with the color red, telling us that price closed lower than it opened. When the block is red, the top of the block is the opening price, and the bottom is the closing price. With 4xCharts, when the closing price is higher than the opening price, then the block will be blue. When the block is blue, then the bottom of the block is the opening price and the top is the closing price.   Candlestick charting is just an easier way to see the same information presented in other formats. Aside from the fact that one of the major technical analysis tools uses candlestick charts, they are also very easy to read. They will give you a good deal of insight into the mind behind the market. The following is an example of a Candlestick Chart in the 1 Hour time frame.  Bar Charts Bar Charts are an easy way to show the open, high, low, and close of a bar. Often these charts are called OHLC Charts. The entire range of prices traded during the time frame is shown by the vertical line. Of course the top represents the high and the bottom represents the low. The short horizontal line to the left shows us the price that the bar opened at. The other short horizontal line to the right tells us the price the bar closed at.  The chart below uses the OHLC or Bar Chart format.  Line Charts Line charts are the simplest charts available. Line charts only represent one instance of price movement. That is it only shows one of the following at a time: Opening price, closing price, high or low. The following chart shows an example of a Line chart. The following chart has two aspects to it. The green line represents the normal line chart using closing bar data. The black line uses high bar data. That is, the line is made by stringing the highs from each bar together instead of the close, as represented by the green line.  Changing between Chart 4XCharts makes it easy to see charts in the above formats as well as three types not covered in this section. When a chart is open simply select the Chart Type from the charts pull down menu and select the chart style you want.   We will cover the other chart styles in later chapters.
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