TradingApplesAdmin

Hey Traders,

For this lesson we're going to look at the different types of charts that exist and discuss which ones are best for trading

Once again for this lesson we will be taking a look at a screen shot of my live trading platform. One thing to keep in mind throughout this lesson is that different chart types are for different people and different types of traders. Different chart types also convey different information. What I am going to express in this video is my opinion and what I have found through experience to be the best chart and best setup for day trading.

I'm first going to click on my chart settings and on here I can select the type of chart I want to look at. The different chart types on my platform are OHLC Bar, Candle, Hollow Candle, Line, Mountain, and Simple Bar.

We're now going to take a look at a line chart, which is what is found on most trading websites and online browser based trading platforms. On this chart, the average price is drawn in a basic line. It is not as easy to see support/resistance and not easy to see the highs and lows of a 5 minute period. This chart type does not convey the same amount of information as candle charts.

Now looking at the mountain chart, we can see this is the same as a line chart however the bottom is shaded in. this is similar to the charts seen on CNBC. This is simply an aesthetic change from the line chart.

Our next chart type is the simple bar chart. This looks like a bunch of volume bars, though they represent price instead of volume. This chart is not very useful in trading. the only useful information this chart conveys is up and down trends, which we can see in this area.

We're not going to move into the candlestick family and take a look at the OHLC bar chart. As you can see here, this chart displays information similar to a basic candlestick chart. The bottom of this candle represents the low of that 5 min period. The high of this candle represents the high of that 5 min period. This little tick on the top represents the price which the candle opened at, and the tick on the bottom represents the price which the candle closed at.

The next chart we will look at is a hollow candle chart. This is also similar to a normal candlestick chart but upward price movements are hollow and downward price movements are still solid. This chart is simply aesthetically different from a candlestick chart.

Next we will look at a candlestick chart, which is the most popular among traders. This is the type of chart Shoot and I both use while trading. Looking at a green or upward candle, we can see that the bottom line is where the price opened and the top line is where the price closed. The green shaded area of the candle is known as the body. We then can look at wicks which are the thin black lines which extend from the candle on the top and bottom. Wicks indicate price movements during the 5 min time interval that are above or below the open and close price of the candle.

Now looking at a red or downward candle, we can see that the top line is where price opened, the bottom line is where price closed, the red part of the candle is the body, and we can see the wicks in both directions.

In my experiences candlestick charts are the most popular among traders because they convey the most information out of any charts and do so in a clean and concise method. We can easily identify different support and resistance levels on a candlestick chart and also easily identify trends. The candlestick chart also helps us identify how price reacts to different support and resistance levels because it utilizes wicks to identify sudden and sharp price movements.

We can also easily change the time interval on charts. Here we will change the interval on a candlestick chart to see how price reacts over time periods at certain price levels. For example if we change from a 5 minute interval to 1 minute interval we can see that price wicked up several times to this price level. This can be helpful in identifying exactly how price reacted to different levels and used in timing entries and exits.

That was a brief overview of the main types of charts that exist as well as my opinion on the best type of chart for trading. Keep in mind different platforms and charting software's will also offer different types of charts than what we covered, although we covered the most basic and common types of charts that exist. For our next lesson we are going to take a look at conventional chart indicators as well as different types of market data that exists on charts. Until then and as always good luck with your trading!