Will an online stock trading software that provides various charting tools such as bar chart, candlestick chart, line graph, and point-and-figure chart affect your final trading decision? If yes, then you are in a party where a lot of peoples in crowd. The use of Charts is widespread among many traders. But, most importantly, charts are used to plot the price of a currency, commodity, or any other asset. So, if you are not aware of the charting tools, you better understand what they mean and how to use them in the right way.
Now let's see some types of charts that many traders commonly use.
This chart is used most time while a trading making a technical analysis report. The chart consists of vertical bars representing the high, low, and last traded price for a currency or other asset. Thus, you can quickly identify whether the currency has moved up, down, or remained steady against another currency. This type of chart is widely used to determine the market sentiments and to make feasible trades.
It is similar to bar charts, but they provide better information regarding opening price, closing price, highest and lowest ranges. These types of charts typically represent a time where each candlestick represents one time period. For instance, if you have plotted a one-day candlestick chart, each candle stands for a whole day.
These types of charts depict the change in currency price over some time. Under this type of chart, you will see two lines representing the high and low among two periods of time. Many peoples also called it as "Line Charts" and helps plot the trends.
This type of chart is very simple since it contains only price bars, consisting of X's and O's that are plotted to indicate the direction of prices during each time. When an X appears, this shows that the price has risen during that time. On the other hand, when an O is plotted, it means that the price has dropped. You can use this type of chart to note down major support and resistance levels, which helps you make better trading decisions.
This type of chart is used to measure the retracement and the extent of a trend. This is done using Fibonacci ratios, a sequence of numbers where each number is equal to the sum of the previous two digits (1 + 1 = 2; 2+1=3; 3+2=5; 5+3=8, etc.). In the Fibonacci chart, you will see a horizontal line drawn from the top to the bottom, consisting of numbers 1 to 100. The other important feature is that you have a vertical line of dots extending from left to right.