Schedule Analytics It plays an important role in day trading and long-term investors. It is a process in which a person looks at charts with the aim of studying trends and predicting trends.
While it is possible to trade without charts, most people find it better to use it. We also recommend relying on this tool, as it makes your work in the financial markets a lot easier.
In this article, we will take a look at what a trading chart is, Chart typesIdentify the most common types of charts in day trading.
Types of charts in day trading
There are several types of charts in day trading. In most cases, these graphs Show overall movement from the original price over time. By looking at it, one can tell if a file The origin is trending or ranging. Also, one can Predict whether the price of the asset will rise or fall.
- Candlestick chart – that’s it most popular Chart type in trading because it shows the open, the close, the high and the low.
- line graph – This scheme It relates the closing or opening price over time. that it Not common used In day trading.
- bar graph – The chart is very similar to the candlesticks in that it shows OHLC.
Other common types of charts in analysis are: Renko, Area, Heiken Ashi, Kaji, Point and Shape, and Range among others.
Types of analysis in graphs
There are several types of analysis when using charts. In most cases, all of these types are known as Technical Analysis. Some rely on technical tools to determine the best entry and exit points for a trade, while others focus more on identifying visible patterns.
First, there is a kind of analysis Focuses on technical indicators Such as moving averages, relative strength index (RSI) and Bollinger bands.
The concentration of these indicators may vary, depending on what we want to measure. Some analyze volume, others volatility, and still others identify crossovers. These are just examples. In fact, there are indications for every need.
Second, there is trend tracking analysis, which traders use to determine whether a trend will continue or reverse. Traders use several strategies to determine this.
For example, they use tools like Fibonacci retracementand Andrews pitchfork. Others use direction Indications Like moving averages to determine the trend.
Third, there is price action analysis, which involves doing Chart and candlestick analysis To identify repercussions and opportunities for continuation. This time with the help of visual analysis and drawing tools that you can commonly find in software.
Some of the best patterns you can use are trianglesAnd the head and shouldersAnd the Dojirises wedge.
How do trading charts work
Trading charts simply provide a complete set of products and tools that people use to conduct analysis and carry out trades. Some of the most popular tools offered by these platforms are:
- Technical Indicators – These are tools, created using mathematical calculations, that help traders predict the movement of the price of an asset. Examples of the most important technical indicators are moving averages, RSI and MACD.
- letter or symbol – Trading planner has a feature where you can search for financial assets like currency pairsgoods Storesand ETFs.
- drawing tools Trading Charts contains a set of drawing tools that traders use to draw on charts for analysis purposes. Some of the best drawing tools found in charts are trend lines, information lines, horizontals, regression lines, and more.
- Planning tools Trading Charts contains the charting tools that traders use in their analysis. Some of the most popular charting tools are Fibonacci Retracement, Pitchfan, Gann Box, Gann Square, and others.
The chart below shows a chart pattern with some of these tools.
Examples of Trading Chart Providers
There are many charts to trade. The most common are:
- MetaTrader 4 and 5 – MT4 and MT5 are the most popular chart patterns. It is mostly provided by companies in the forex and CFD industries.
- TradingView TradingView is another popular type of chart. It has thousands of financial assets and a lot of tools.
- NinjaTrader – NinjaTrader is another popular trading chart that contains many tools for trading such as indicators and drawing tools.
- PPro8 – This is the trading software provided by DTTW™. It is one of the most advanced products and contains all the tools a trader needs to make decisions.
What charts do professional traders use?
There is a common question about the common types of charts used by professional traders. In most casesBased on our experience, more Professionals merchants Prefer to use candlesticks in trading. The candlestick is a clear chart pattern-See open, high, low and high prices. The chart below shows bullish and bearish candlesticks.
On the left side, there is a bullish green candle. In the hourly chart, one candle usually represents one hour. Similarly, in the daily chart, one bar represents a day.
The candle consists of a body and an upper and lower shadow. Shadows show the letter hhighest and lowest point While the body shows the opening and closing prices.
Advantages of candlestick patterns
There are many reasons why Japanese candles are the best trading charts.
- More data Unlike a line chart, candlestick provides all the data a trader needs, including the open, high, close and low.
- Can be used with pointers Candlestick patterns can be used well with indicators such as moving averages and RSI.
- easy to understand Candlestick charts are easy to understand. For example, in the hourly chart with more green candles, it means that the price is in a strong uptrend.
- Can be used with algorithms Candlesticks can be used with algorithms because they are easy to use.
- Many candlestick patterns Exist – Another advantage is that there are many candlestick patterns that can help you make decisions.
Disadvantages of candlesticks
There are not many disadvantages to using candlesticks. First, sometimes, Candlestick charts can have huge gapswhich is not easy to trade with.
Second, sometimes, graph patterns can provide A lot of information. For example, the histogram can form a double top and an ascending triangle at the same time.
By now, you must have understood: Although you can trade without using charts, it is one of the most powerful tools for your analysis.
You should also realize that your efforts, in the beginning, you need to focus on candles because you will be using them 99% of the time.