|Chart:||A visual representation of numeric information. Financial analysis employs 3 types of charts: line charts (2-dimensional), and bar or candlestick charts, which provide additional information for periodic blocks of time.|
Chart Types & Time Frames
Chart Types - text
Charts Types &Timeframes
Welcome to our tutorial Charts Types &Timeframes
Let start with Chart Types
Three of the most popular charts types are: Line charts, Bar Charts and Candlestick charts
Letâ€™s have a look at all three in more detail.
Line charts are the most basic of the three and simply map a line from one closing price to the next.
When linked together they show us the general price movement of an instrument over the period of time selected.
On this chart we can see the closing prices for each day linked together in either green or red lines.
Green showing markets rising that day and red showing markets falling that day.
Letâ€™s look at bar charts.
Bar Charts provide us with more information about the price than line charts.
They show us the closing price like line charts but also the opening price and the high and the low price for the timeframe selected
For example lets look at this chart
The very top of the bar indicates the highest price for that period.
The very bottom of the bar indicates the lowest price for that period.
The horizontal dash on the left of the vertical bar indicates the price the instrument opened at, which is the start of that given period and the horizontal dash on the right refers to its closing price.
Ok Letâ€™s look at Candlestick charts
Candlestick charts are without a doubt the most popular type of chart.
Candlestick charts show the exact same information as bar charts but are visually more appealing and are easier to interpret for both the beginner and advanced trader
Candlesticks show the open and close price and the high-to-low range with a vertical line. They are different from bar charts in that the candlestick shows a body within the range between the opening and closing price.
It is important to note that each candlestick represents a particular timeframe. Lets look at a daily Â chart so each candlestick represents 1 day of trading
In our example here the body within the range is green representing a bullish move (meaning that price in the market closed higher that day)
If we see a red candlestick this represent a bearish day meaning that the price closed lower that day.
The body of the candlestick may not always be green and red in colour but these colours are the most frequently used.
Ok, so Letâ€™s now look at the different types ofÂ Chart timeframes we can select
A chart can be displayed in various different timeframes
In the top left of this chart we see the different options from minutes, hours, weeks and months
Each individual candlestick on a chart will represents the timeframe you select
So in our chart example here each candlestick represents 1 day or 24 hours of trading.
If we change the chart to a 1-hour chart each candlestick now represents 1 hour of trading activity in the market
So 24 of these candlesticks represents just 1 candlestick on our 1 day chart
So whatever timeframe we choose that is the timeframe that will be represented by each individual candlestick on our chart.
Test out your knowledge of Charts and Time frames on your Ava demo account by clicking below