Stock Market Charts

There are different types of stock market charts that investors will use when trading in the stock market. In today’s article we will discuss the most common types of charts used when trading stocks.

Line Charts – the line chart is created by connecting a series of data points together with a line. It is the most basic type of chart you will learn about during your trading education. It is used in finance and it is created by connecting a series of past prices together with a line. While the most basic of the stock market charts, this line chart can give investors a pretty good idea of where the price of an asset has been over a specific time frame. They display the closing price clearly. There are other types of popular stock market charts as you learn how to trade stocks, including the bar chart, the candlestick chart and the point and figure chart.

Bar charts – the bar chart is used in stock market technical analysis and the top of the vertical line on a bar chart indicates the highest price that a security is traded during the day. The bottom line represents the lowest price. The closing price is displayed on the right side of the bar, and the opening price is displayed on the left side of the bar. While this is a bit more complex than the line chart, it is still fairly simple to read.

Point and figure charts – the point and figure chart plots the day-to-day price movements without looking at time as a factor. These stock market charts include a number of columns that are either a series of stacked X’s or O’s. The column of X’s is illustrates the rising price where the O’s represent the falling price of a stock ’s value. This type of chart is used when trading online in order to filter out non-significant price movements. It also helps traders to easily determine support and resistance levels. Stock traders place their orders when the price moves beyond specific support and resistance levels.

Candlestick charts – Japanese candlestick charts are the favorite of stock market charts among traders. These stock market charts were developed in the seventeenth century by Japanese rice traders and were brought to this country later. They are pretty simple to read and they provide very valuable price analysis information. These charts consists of candlesticks that are made up of information such as the open, high, low, and close for a given time period. They allow day traders to quickly analyze the movements or potential trend changes in a security.