Online Investing Hacks

Technical Charts

There are four basic types of charts used to track tradable stocks and other investments: line charts, bar charts, candlestick charts, and point and figure charts. Graphs are appealing because they often present a clear picture of the trading state and equilibrium of a tradable item, such as a stock, index, or even a mutual fund. Charts have been used to trade commodities long before U.S. markets came into existence—Japanese rice dealers in the 1700s employed candlestick charts to set prices and trade their wares.

All four chart types share a few characteristics, in addition to having their own unique features. Most technical analysis chart users favor one type of chart and usually stick with their charting weapon of choice. Other practitioners employ several types of charts, and a few people use all of them. As a beginner, it’s best to absorb all you can about one type of chart before branching out to another.

Although printed chart books are available, technicians can use a software charting package [Hack #53] , such as MetaStock from Equis International, to create charts on their desktop or laptop computers. However, these applications require data, usually daily updates, to create charts of interest. Generally, the more stocks, indexes, funds, or other investments covered and the more data fields provided, the greater the cost of the data.

Charting web sites have their own data source automatically updated daily, usually at no extra cost for delayed data. ...