Charts are the life-blood in stock trading especially in technical analysis. This is like the air that the traders breath everyday for them to survive.Not only for monitoring, charts also serves as a tool to predict the future behavior of a stock.
Many successful traders use charts as part of their processfor selecting which stocks to act upon, and when to execute and subsequently and a trade. There are three main types of charts:
- A line chart is the most basic form of a chart. It also contains the least amount of information for traders. It will show only the closing prices for the given time period.
- A bar chart will give quite a bit more information than a line chart. Aside from just showing closing prices, the bar chart also will show opening, high, and low prices for the given time period as well.
- The candlestick charting method will give the trader the most amount of information. It includes all of the parts of a bar chart but alsohas the addition of the main trading range for the day. These charts are also color-coded; you can see with just a glance whethe prices rose or fell for the given day.
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