Trading Charts: What They Are, What They Are For, Types

Il trading is an activity of buying and selling financial instruments through online platforms. The goal is to earn on the price difference between buying and selling. The purchase and sale operations are carried out on the so-called trading platforms. But it must be said that not all that glitters is gold. In fact, if on the one hand this activity can be very profitable, on the other it can turn out to be a real "hole in the water". As reported in Il Sole 24 Ore, 90% of traders end up losing money on the financial markets. To avoid mistakes, a prudent trader, before investing, needs to analyze a trading chart to understand the right methods and timing to open and close a position. That said, we will try to evaluate some of them below investment techniques trying to understand what trading charts are, what they are for and how you can consult them online.



What are Trading Charts

The use of trading charts allows you to have a clear perspective on theperformance of an asset on the stock exchange. They can also be useful for making market forecasts. a stock market chart is the heart of technical analysis because it represents the path, the track record, of theperformance of a financial instrument. In fact, the basic assumption of technical analysis is that by studying past prices we are able to have what could be the future of the performance of a certain financial instrument.

What are they for

Un trading charttherefore provides a real-time representation of the performance of a certain asset. In detail, it gives indications on changes in value recorded during an open market session. 
These graphs are mostly represented on the two Cartesian axes (X; Y), on one axis the value of the price of a good is represented and on the other the value of time. There consultation of stock market charts it is very relevant because it serves to determine when to enter or exit the market. With the term enter the market it means the moment when a trader opens a position and then initiates an investment while for exit the market we mean the closure of a position or the conclusion of a market transaction. THE real-time trading charts in essence, they allow you to make more rational investment choices since by keeping an eye on the performance of an asset it is possible to act promptly.



Trading Charts: What They Are, What They Are For, Types
Trading Charts: What They Are, What They Are For, Types

Types of Charts

They mainly exist three types of charts. A chart can, in fact, be linear, Japanese candlestick or bar. 

Il linear graph it is very simple and shows only one data relating to the end of a given day. By closing is meant the last figure of the stock exchange day, that is, the last price that that stock hit on a given trading day. The linear chart, of course, only gives one information that is the latest price. L'technical analysis is based on price information which is why you can choose other chart types.

The most used is the Japanese candlestick chart as it shows four information for each session. So, every single candle that appears on the chart corresponds to a single trading day and we have four pieces of information about each trading day. First of all, if the day was positive on the stock market, for the analyzed stock, then we will have a green colored candle. On this candle we will have the opening data, the horizontal line at the bottom, then the closing data, which is the highest horizontal line, and then we will find something very interesting, that is the minimum price reached in the single session being analyzed and also the maximum price, which is given by the lower and upper vertical lines. These vertical lines are called "shadows" and are very useful because they help us understand what the pressure of supply and demand has been at various points on the graph. 

Il bar chartfinally, it is based on the use of vertical lines that reconstruct one visual movement of the price on the security in a time frame set by the trader. The bars, therefore, refer to the four most important price levels namely the opening, the maximum, the minimum and the closing price. Specifically, the left line of the vertical bar represents the opening price while the right one highlights the closing price; the overall excursion, i.e. the maximum and the minimum marked, are represented by the two extreme levels of the bar itself.



Analysis and Time Frame

The interesting aspect of stock market charts is that it is possible vary the time frame, or time horizon, of the graph, for example by passing from an hourly to a weekly time frame. If you choose an hourly time frame, for example, we will be able to analyze the four price levels in relation to a single hour. One hour, therefore, will correspond to a candle. Clearly, if we reduce the time frame then we will get a shorter analysis while if we increase the time frame the greater the analysis. The wider the time frame, the easier it is to perform an analysis and this is because, for example, a 5-minute time frame updates very quickly and consequently you have to be very reactive. A basic aspect is that you first need to know the type of operation to do and only after that it is possible to adopt the right time frame on which to carry out the technical analysis.



The Best Trading Charts

The main sites where it is possible consult free online trading charts are TradingView, The Sun 24 hours, MilanoFinanza.it e BorsaSpagnana.it. These sites allow you to view the graphs in real time. The reference markets are many, from cryptocurrencies to stocks, from futures to indices, from bonds to currencies. The trader will be able to add text, make measurements, zoom in or select a part of the chart itself to find out about the small details and also be able to see the date on which that stock was listed on the stock exchange.

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