3.1 – Types of Charts
If not for a good charting technique, charts can get quite complex. Each trading day has four data points, i.e. the Open, High, Low, and Closing called the ‘OHLC’. Looking at a 10-day chart, we need to visualize 40 data points (1-day x 4 data points per day). So you can imagine how complex it would be to visualize six months or a year’s data.
The key is to use an effective charting technique that will help us effectively analyze the OHLC. Let us learn more in this video.
In the following video, we will learn about the charting timeframes.
We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- Conventional charts can’t be used for TA as we must plot 4 data points simultaneously.
- A line chart can be used to interpret trends only.
- Bar charts are unpopular as they’re unappealing, and patterns aren’t easily identifiable.
- Candlesticks Types – Bullish & Bearish. The structure of the candlestick, however, is unchanged.
- Close > open = Bullish candle. Close < open = Bearish candle.
- Time frames are crucial in defining trading success.
- The number of candles grows as the frequency rises.
- Traders should discard noise from relevant information.