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A trading chart is a chart tied to real time financial market data that an individual or trader uses to aid in making informed decisions about buying or selling securities to profit from.
Trading charts can be visual representations of stock market prices, currency rates, commodity prices, treasury notes or any other security that can be traded.
The data shown in a trading chart can vary from weekly or daily historic prices to real time streaming information, showing minute by minute data as the market moves. By utilizing an open, high, low and close price (OHLC) of every price tick, the information can be shown in a number of ways depending on the viewer's preference. Line, bar and candlestick charts are the most popular chart types to view stock price information, but mountain, dots and point and figure chart types are also popular and widely used. As the chart ticks along on its time axis, the data plots are added to the diagram, making the price or security move up and down. This visual representation gives the user a feel of how much momentum there is in a market at any given moment.
Most stock trading charts come with a wide range of indicators to aid in making trading decisions. Moving average, RSI and MACD are some of the more commonly used charts. These indicators give the trader or investor a graphic aid to ascertain whether a market is changing direction, or if it's showing signs of movement that they could profit from.
It is extremely common for brokers to supply their customers with high quality charting software or applications in their execution platforms. Therefore, the need for third party charting software has been reduced. However, as a person becomes more advanced, they could find that the limitations of charts provided by brokers slow their trading. Fortunately, there are a number of advanced charting solutions available for purchase, many as a standalone product. These platforms sometimes come with highly developed trading indicators and algorithms, automatic trade execution scripts and custom indicator building elements.
Stockcharts.com is one of many sites that allows its users to create custom stock charts. "Who thought making great looking financial charts could be so easy?" says their website. "We give you the tools, the educational information, the expert opinions, and the support you need to improve your investing. While anyone can use our free tools, subscribers get access to real-time data and much more." |