Charting 101


Charting 101

What are charts?

Charts are constructed for any time interval you define. A price chart is a series of prices arranged over a pre-defined time frame. In the following, prices are considered for each time interval displayed in the chart:

Price chart
  1. Open price: the price of the first trade during the current (or most recent) day.
  2. Close price: the price of the last trade during the current (or most recent) day.
  3. High price: the security’s maximum trade price during the current (or most recent) day.
  4. Low price: the security’s minimum trade price during the current (or most recent) day.

Chart construction

There are three main types of charts: line, bar, and candlestick charts. Although there are more types, these are typically regarded as the more common ways of displaying price data.

Line chart

Line charts allow for higher focus on the closing price of a security. By paying attention to the close, traders can see past the intraday swings. This chart type is valuable for traders who believe the closing level to be more important than the open, high or low. When open high and low data points are unavailable, line charts can be of significant value.

Line chart

Bar chart

Perhaps the most popular chart type, bar chants use the high, low, and close to formulate the price plot for each period. The top and bottom of the vertical bar represent the high and low, and the close is the short horizontal line crossing the vertical bar. Daily charts have bars where the high, low, and close are shown for each indicated day. Weekly charts have a bar for each week based on the week’s market close and the maximum high and low for the entire week. Traders looking to display a large amount of data often choose bar charts.

Bar chart

Candlestick chart

Candlestick charts use the open, high, low, and close to formulate the price plot for each period. A daily candlestick contains the open price, the intraday high and low, and the close. A weekly candlestick contains the market’s first open, the high-low range through the week, and the market’s final close. Candlesticks are widely used because many traders find them easy to read because of the way the open and the close are displayed.

Candlestick chart

Chart types

Charts are constructed for the interval of time you define. The following prices are considered for each time interval displayed in a chart:

Chart type Description Example
Candle style A candle-style chart displays each unit as a candle. A candle is composed of two wicks (two lines) and the body (rectangle). One candle will tell you the following information: opening price, closing price, high price, and low price. The body color is based on whether the open is higher than the close or vice versa. Candle style
Open high low close (OHLC) bars style An OHLC bar chart consists of centrelines connecting high and low prices for the specified frequency. Bar width corresponds to the time interval. Open and close prices are displayed as horizontal lines projecting to either side of the centreline. By default, negative and positive trends appear in different colours. Open high low close (OHLC) bars style
Open high low (OHL) bars style An OHL bar chart consists of centrelines connecting high and low prices. Bar width corresponds to the time interval. Open price is displayed as a horizontal line projecting to the left of the centreline. Close price is not displayed. By default, negative and positive trends appear in different colours. Open high low (OHL) bars style
High low close (HLC) bars style An HLC bar chart consists of centrelines connecting high and low prices. Bar width corresponds to the time interval. Close price is displayed as a horizontal line projecting to the right of the centreline. Open price is not displayed. By default, negative and positive trends appear in different colours. High low close (HLC) bars style
High low (HL) bars style An HL bar chart consists of centrelines connecting high and low prices. Bar width corresponds to the time interval. Open and close prices are not displayed. By default, negative and positive trends appear in different colours. High low (HL) bars style
Line style A line-style chart displays close prices connected with straight lines. Open, high, and low prices are not displayed. By default, negative and positive trends appear in different colours. Line style
Area style Area style (also known as mountain style) connects all close prices with a line and colours the area underneath. The area included is highlighted with a different colour. Area style