Monday, July 31, 2006

Charts in Marketiva - basics

Please allow me to provide you details on how to read charts at Marketiva:

A price chart represents a sequence of prices plotted over a specific time frame. On the chart, vertical axis (referred to as y-axis) represents the price scale and the horizontal axis (x-axis) represents the time scale. Prices are plotted from left to right, so the most recent price value is placed on the furthest right.

Four most popular charts styles are implemented in the Streamster:

Line Chart

Line chart, often referred to as Fever chart, is one of the most common forms of graph, particularly favored by scientists, with data points
displayed against X and Y axes and all the points connected with a single line. The points themselves are not shown.
Alternatively, all the data points may be shown and a line drawn which doesn't necessarily go through them all but which gives areasonable "best fit" to them all.

Line HL Chart

Line chart is the easiest chart to read and it clearly illustrates trend of the market. The drawback of Line chart style is that it does not show
how volatile market is in specific period. Two grey lines on Line HL (High / Low) chart, one above and other under base line,
show High and Low value in a period of time. If all three lines are almost "glued" together, market in that period had low volatility and vice-versa.

Bar Chart

Bar chart is graphic representation of price action using a vertical bar.
Each vertical bar shows four values:
- Highest price during a period - value at the top of the line,
- Lowest price during a period - value at the bottom of the line,
- Opening price is shown as a horizontal line on the bar's left side, and
- Closing price is shown as a horizontal line on the bar's right side.
Bar charts can be effective for displaying a large amount of data: Line chart is not suitable if High and Low values are used in analysis and Candlestick chart takes a lot of room on graph, making it harder to "read" and analyze.

Candlestick Chart

The Japanese began using technical analysis to trade rice in the 17th century, but the US version initiated by Charles Dow at the beginning of 20th century popularized it in technical analysis. Charles Dow developed the Dow Theory from his analysis of market price action in the late 19th century.

Each candlestick is composed of a vertically standing rectangle (body) and vertical lines
(shadows). The rectangle indicates the open and close of trading periods. If the body of a candlestick is white, the close price of the period was higher than it was when it opened. A black body signifies a closing price lower than the price at the opening of the period. Highest and
lowest values of a period are shown as value at the top and bottom of the shadows.

Compared to traditional bar and line charts, many traders consider candlestick charts easier to interpret. Each candlestick gives a representation of price action. Trader can compare the relationship between the open and close as well as the high and low in that period and get the vital information about the market: White (hollow) candlesticks indicate buying pressure, while black (filled) ones indicate selling pressure.


Charts can be displayed for any time period in which prices are available, ranging from 5
minutes to one month. Traditionally, the most popular time chart intervals are hourly and

4-hour intervals, however, it is also common to use smaller time intervals such as 30 minutes, 15 minutes, and even 5 minutes.


One chart style is not necessarily better than the other. They all show same data, but each method will provide its own unique interpretation,with its own benefits and drawbacks mentioned above.

Which charting method to use, will depend on your personal preferences and on your trading style. One advice is to limit the number of charts, indicators and styles you use and that once you choose a particular charting methodology, you should stick with it and learn how best to read thesignals. Constant changing, may cause confusion and undermine your trading.

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