Short Term Traders trade on the basis of daily charts as they are more interested in the immediate movement in the stock prices, whereas Medium term to Long term Traders are more dependent on weekly / monthly charts as they want more returns for which they are prepared to wait for a longer duration.
There are 3 types of charts which are commonly used by chartists. These are:
The X-axis on a chart plots the periods for which prices are plotted and the Y-axis plots the value or the price of the share. This could range from a few hours to a few years. This means that prices can be plotted based on the prices that range from hours to years. Thus we could have minute charts as well as hourly, daily, weekly, monthly, quarterly, yearly charts based on the above data.The 4 quotes are normally in the order of-
Let us see how a Bar chart and Candlestick chart is constructed with the help of the following illustration.Script A:-
|Opening Price on a day||Rs. 150|
|High price of the day||Rs. 160|
|Low price of the day||Rs. 125|
|Closing price of the day||Rs. 130|
In a Bar chart, the open is indicated by a small dash ( - ) which is drawn on the left side of the Bar, and the close by another dash on the right side of the bar. In a Candlestick chart, the real body i.e. the 2 ends of the body, show the opening and the closing price for the given period. The lines at the top and bottom of the real body are called the shadows, and they denote the high and the low for that session. The colour of the body denotes the open and the close of that session. If the open to close is on the higher side i.e. it is a bullish candle, the colour of the candle is white and if it is bearish then the colour of the candle is black. In some packages, green and red are used instead of white and black.