One financial chart used to describe prices achieved of a security, currency or derivative is called Candlestick Chart. Each “candlestick” reflects one day. It is like a combination of line-chart and a bar-chart, with the premise that each bar represents all four pieces of important information for that day:
Candlestick charts are technical analysis of currency and equity price patterns. They are not related to box plots despite their appearance.
Scheme of Candlestick Chart
The Low and High caps don’t need to be displayed unless to ease reading.
Candlesticks display a body that is white or black and an upper and lower shadow wick. The charting area between open and close is named real body. Price movements above and below real body are named shadows.
• The wick illustrates highest and lowest traded prices of a security;
• The body illustrates opening and closing trades;
• If the security closed higher than when it opened, the body will be white or unfilled;
• Opening price is bottom of the body and
• Closing price is at top of body.
However, if security closed lower than the price when the trade opened, the body is shown as black, with the opening price at the top position and the closing price at the bottom position.
The trend of the candlestick chart is often shown with colors. Modern candlestick charts often replace the black or white of the body with red for closing lower and blue or green to note a higher closing. East Asian countries reverse the colouring scheme.
Usage of Candlestick Charts
Candlestick charts are a visual aid in decision making in:
• Foreign Exchange
When the bar is white and high relative to other charted time periods, it means buyers have become very bullish, while the black bar means the extreme opposite.
Point and Figure Charts and How To Draw
Point and figure charting does not chart a trade price against time. In the alternative, it plots trade price against changes in direction with Xs and Os. It plots a column of Xs as the price rises and a column of Os as it falls.
Drawing a Point and Figure Chart means plotting every price change. This is difficult as a matter of practicality. Decide on value of each X and O. Any price change below this value is ignored, so smaller changes are filtered out. The chart entries change their column when price changes direction with a certain number of Xs or Os. Traditionally this was either one, called a” 1 box reversal chart” but traditionally used much more often used is three, a ”3 box reversal chart”.
Usage of Point and Figure
Point and Figure charting is based on price instead of time. If there are no price moves over time, there is no new data charted. This trait makes P&F ideal for charting direction patterns.
The technology computerization radically changed charting in the 1960s and 1980s. Now data can be charted and analyzed within minutes and a correct directional movement established for making trades. FX trading was born as a result of technological advances.
AlfaTrade has become the industry standard for online trading systems. This was achieved because of the company’s mission offering the best technology and innovations. The expert trading company provides:
• Personal Financial Coaches
• Extensive Data
• Enhanced MT4 Platform
• Diverse Accounts to Meet Goals
Before attempting to rely on your untried charting techniques, consult professional experts concerning how they can help bring your goals goals to accomplishments.