What is a chart?

A chart is graphical representation of a series of prices over a set time frame.

On the chart, the vertical axis (y-axis) represents the price scale and the horizontal axis (x-axis) represents the time scale.

Here you can take a look at AGEA live chart

Charts make the life of traders easier because they can be used in multiple ways and they can summarize thousands of data and give a clear picture of an index, financial instrument, indicator, etc. The analysis of charts in order to forecast future price movements is called Technical Analysis.

Technical Analysts, or chartists, use the chart and multiple statistical indicators in order to determine trends, levels of support and resistance, price patterns etc.

Another important aspect of a chart is the time frame. Different time frames are often available: tick chart, 1 minute chart, 5 minutes chart, 15min chart, hourly chart, 4-hours chart, daily, weekly, monthly etc.

Based on your trading style and your strategies, you will used one time frame or the other one. For example, if you are an intraday trader, you will keep an eye on the short-term charts. If you are more interested in the long-term trends of a specific financial instrument, you will keep an eye on long-term charts. Using both long-term and short-term charts is suggested as it can give you a clearer picture both on the short term and long term movements.

There are different types of charts. The most used ones for trading are the:

  • Line chart
  • Bar chart
  • Candlestick chart

Line chart

The Line chart is a type of chart that displays information as a series of data points connected by straight line segments. It is probably one of the most basic type of charts.

Bar chart

A Bar chart, also known as OHLC chart (Open-High-Low-Close Chart), is a type of chart usually used to describe price movements of a financial instrument. Each vertical line shows the price range (highest and lowest price) over one unit of time (1 minute, 15 minutes, 1 hour, 1 day, etc). The tick mark on the left displays the opening price, the one on the right displays the closing price.

Compared to the Line chart, the Bar chart displays more information on the price movement and therefore can be more useful for the trader. A type of Bar Chart is the Japanese Candlestick chart.

Candlestick Chart

The Candlestick chart is a particular type of Bar chart often used by technical analysts to identify price patterns. Candlesticks are composed by a body (black or white) and an upper and lower shadow.

The area between the open and the close is called the real body, price excursions above and below the real body are called shadows. The wick illustrates the highest and lowest traded prices of a security during the time interval represented. The body illustrates the opening and closing trades. If the security closed higher than it opened, the body is white or unfilled, with the opening price at the bottom of the body and the closing price at the top. If the security closed lower than it opened, the body is black, with the opening price at the top and the closing price at the bottom. A candlestick need not have either a body or a wick.

To better highlight price movements, modern candlestick charts (especially those displayed digitally) often replace the black or white of the candlestick body with colors such as red (for a lower closing) and blue or green (for a higher closing)