Traders and investors always look at charts when
they make trading decisions, because those charts contain essential information
about the behavior of prices. Here are some familiar types of charts that
facilitate performance analysis.
Figure 1. One-year line chart of daily prices for EUR/USD
A line chart is simply a line graph connecting prices at different
times. Shown in Figure 1, examples of a daily chart and an intra-day chart:
Figure 2. Three-month bar chart of daily prices for EUR/USD.
Figure 2 shows an example of a bar chart,
displaying the daily open, high, low and close prices of YAHOO. One can see
that, compared with the line chart, the bar chart reveals more information
about the prices.
Candlestick charts are very popular in Asia. Essentially,
they contain the same information as bar charts. Figures 3
shows an example of a candlestick chart:
Figure 3. Three-Month candle stick chart of daily prices for EUR/USD
Figure 4. Daily price candlestick chart with Fast Stochastics for EUR/USD.
Besides price, many other indicators contain important
sources of market information. The common practice is to plot prices together
with other technical indicators, which will be discussed in detail in the
next section. These accompanying graphs are called "Reference
Charts." Figure 4 shows a chart with Fast Stochastics.