Types of Charts

There are many type of chart but we discuss here only famous and widely use chart only   

Line Chart

This is one of the most basic charts, probably giving the least amount of information.  The line in the top pane is drawn using the close price for each unit of time.  So if this is a daily line chart, the close price for the day is used.  If this is a 5-minute chart, then the close price for every 5 minutes of trading is used.

The Positives of Line Stock Charts

A straightforward view of the price movement.  Good to use when comparing the performance of many stocks on the same chart.

The Negatives of Line Stock Charts

It does not show the Price Open / High / Low for the trading period.  The day’s trading range is important in price-based decision-making as it indicates bullish or bearish momentum.

2. Bar Stock Chart

Using bars is a step up from the line chart as it allows us to plot additional useful data on the chart.  Here we have each bar representing a trading period with the price High, Low, and Close represented.  Refer to the diagram.

The Positives of High Low Close Bar Charts

More information is available, showing the days trading range, meaning did the stock price close near it’s high (bullish) or near it’s low (bearish).

The Negatives of High Low Close Bar Charts

No opening price is reflected in this chart.  The opening price is important as it allows us to immediately see if the price gapped up or down on open and where the closing price is related to the opening price.

                                                                                                                                                                               

3.Japanese Candlestick Charts

Used widely in Japan and gaining a strong foothold in the rest of the world, the Japanese Candlestick chart gives an excellent insight into current and future price movements. Named Candlesticks because they look like candlesticks with a wick and the main body.

Japanese Candlestick Chart

The Positives of Japanese Candlestick Charts

Gives an excellent view of the Open, High, Low, and close of the price.  Pictorially illuminating and easy to see trends.  There is a full reference below of 1 bar to 4 bar patterns, which help us make judgments on the future direction of price.  They connect psychology with the price pattern.

The Negatives of Japanese Candlestick Charts

Although Candlesticks have many advantages, they can seem like information overload to the beginner.  There are also many Candlestick patterns to learn.

Further Reading on Japanese Candlesticks.

• Candlestick Charts
• Bullish Candlestick Patterns

 This Japanese Candlesticks chart is mostly use in Technical Analysis

                           Thank you