Types of Charts For Analysis

In this article, we will be covering various types of charts, frequently used in technical analysis. Before we go in details of these charts, let’s first quickly understand few terms associated with price of a security (shares/bonds/derivatives)

1. Open price: price at which first trade happens, after market opens for the day

2. Close price: price at which last trade of the day happens. Sometimes, it’s the average price of last few minutes

3. High price: highest price attained by the security, during the daily trading session

4. Low price: lowest trading price during the daily trading session

Line chart

It is constructed by joining various data points at different time intervals through a straight line. 

Bar chart

It shows a lot more information, compared to a line chart. In line chart, we joined all the data points using a straight line. Here, we don’t join these data points. Top most point of the line shows high price of that day. Bottom most point depicts the low price of daily trading session. If we join all the points at which these small dashes are cutting vertical lines, we will again get the line chart that we discussed in our previous point. Apart from high, low and close price information, there is one more very important thing that bar charts convey. The length of each vertical line shows the extant of daily price movement. If the length is very high for a particular day, it means that there is big difference between highest and lowest prices attained during that day’s trading session. Thus, a stock would have experienced high volatility in that trading session.