Understanding Various Chart Types For Stock Trading
Analyzing and predicting financial data is an integral part of stock trading. Many types of charts are used in stock market analysis in order to identify trends – this helps in buying and selling stocks.
Both beginners and seasoned financial planners need to read and interpret data from different types of stock charts, this requires some skill as it is not easy for a layman to understand stock charts..
By going through stock websites one can see that a lot of information is shown in charts, these are extremely helpful in making the right business decision. The first thing to understand is trends, the trend shows the direction of a stock – whether the stock prices are going up or down, Additionally, it helps to know the historic opening and closes prices of each stock – this data can be conveniently- presented on charts.
Though there are many types of stock trading charts, one must know the commonly used ones and their advantage in understanding stock data. The ‘line chart’ is the simplest – it shows a line connecting the dots – which represents the closing price of a stock. This chart is good for beginners but it does not show the price movement for each day. Line charts are mostly used to see stock price movement at a glimpse, but not for any trend research.
The Bar Chart shows little more complex data, it can help you visualize price fluctuations within a single business day. The highs and lows of a bar chart shows how much the stock price is fluctuating. A trend line on a bar chart shows the extent of the fluctuation. Additionally, the bars can be colored to show the rise and fall of stock prices. Another widely used chart is – the Candle Stick Chart, this resembles a candle with its wick protruding from each end. In this chart the opening and closing price of stock is determined by the length and position of the candle. It in the similar fashion as s a bar chart, but highlights the relationship between opening and closing prices. The actual advantage of candle stick chart over bar chart is that it is easier to interpret visually appealing in compared to a bar charts.
There are many different types of charts which are used for analyzing stock data. However, the candle stick chart is by far the best for visualizing stock market data.
About the Author
Sudhi is a shiny happy man mad about everything WordPress. Currently he peddles distractingly beautiful charts for FusionCharts. A web marketing pro, an online communications expert, Sudhi is all that and more shaken into a lively punch.
University: Types of Stocks