Stocks are a popular investment instrument in the financial market. In stock trading, stock charts are used to visualize a company's stock performance over a certain period of time.
Stock charts show changes in stock prices over time and provide information about volatility, trends, and trading volume. Below are some common types of stock charts used in technical analysis.
Line Chart
A line chart is the simplest and most easily understood type of stock chart. It displays the movement of stock prices in the form of a line connecting the daily closing prices over a certain period of time.
A line chart is suitable for showing long-term trends in stock prices and gives an overview of how well the stock has grown over a specific period of time.
Bar Chart
A bar chart is a type of stock chart that shows the movement of stock prices in the form of vertical bars. Vertical bars represent the opening, closing, highest, and lowest prices over a certain period of time.
A bar chart can assist technical analysts in understanding the volatility and movement of stock prices during a specific period of time.
Candlestick Chart
A candlestick chart, also known as a Japanese candlestick chart, is a common type of stock chart used by technical analysts.
The candlestick chart displays the movement of stock prices in the form of candles that represent the opening, closing, highest, and lowest prices over a certain period of time.
In a candlestick chart, the color of the candle indicates whether the stock price went up or down during the specified time period.
If the candle is green, it means the stock price went up, while if the candle is red, it means the stock price went down.
Point and Figure Chart
A point and figure chart is a type of stock chart used to show changes in trends on a stock. The point and figure chart displays stock price data in the form of points and lines that form a particular pattern. This pattern can help technical analysts predict the future movement of stock prices.
Renko Chart
A Renko chart is a type of stock chart that displays the movement of stock prices in the form of boxes. The Renko chart is used to eliminate market noise and focus on the trend of stock prices. The boxes on the Renko chart change color if the stock price goes up or down by a predetermined amount.
Point and Figure Chart
The Point and Figure chart is a type of stock chart that displays the movement of stock prices in the form of points and boxes. This chart eliminates market noise and focuses on long-term stock price trends.
The points and boxes on the Point and Figure chart form specific patterns that can help technical analysts predict stock movements.
Heikin Ashi Chart
Heikin Ashi is a type of technical analysis chart for stocks that is less popular. However, Heikin Ashi is the easiest type of technical analysis chart for stocks to read and understand.
It is so easy that many stock traders and investors tend to underestimate it. The name Heikin Ashi consists of two words, Heikin and Ashi. Literally, Heikin means average, and Ashi means movement. So when combined, the meaning of Heikin Ashi is "average movement".
At first glance, the Heikin Ashi chart is somewhat similar to the Candlestick chart. There are colors, there are wicks, and there are candlestick bodies. But the similarities end there. The other components are completely different.
Learn Stock Charts to Achieve Big Profits
The key to successful stock investment lies in both fundamental and technical analysis. If you are skilled in fundamental analysis, such as reading financial reports, you should also learn about stock charts as part of technical analysis.
By mastering both of these analytical skills, you will become a successful stock investor, a professional in your field, and precise in every step of your trading decision-making. As a result, you will achieve maximum profits from your stock investment.