Weekly/Monthly Charts Although daily charts are the most widely used by traders, charts plotted on a longer timescale give a perspective on the markets and the particular shares you are interested in. When you are analyzing trends for your trading system, you really need to look at the longer time scale to be sure how […]

Open Interest You should remember from Module 1 that open interest is another type of trading volume. It is used for futures contracts, and is a count of all the outstanding futures contracts that are out there. It is simply defined as a count of the total number of long positions, or of short positions. […]

Volume When we discussed market action in the first module, price was only one of the factors. The second factor in most trading is the volume, and it is important for technical analysis that we have a way of examining that. If you remember, Dow was interested in volume as a confirmation that an apparent […]

Arithmetic and Logarithmic Price Scales When you plot your charts, you will have a choice of using arithmetic or logarithmic price scales. Don’t worry, as the computer does the work for you, you don’t have to remember your school lessons about logarithms, you simply need to know the effect of each. The arithmetic scale, which […]

Real Life Chart Samples Now you are familiar with how charts are drawn, here are examples of line, bar, and candlestick charts which are all drawn for the same stock and timeframe. You can use these to show you the information in different ways, depending what you are trying to see. httpv://www.youtube.com/watch?v=PLd7SuDqm8E Bar Charts versus […]

Candlestick Charts Before we look at real life charts, there is one other form which is very popular, and that is called the candlestick chart. There are quite a number of different chart types but the one most used by traders tends to be daily candlesticks. Candlesticks were discovered in 1987 by Steve Nison, who […]

Bar Charts Perhaps the most commonly used chart for Western traders, and one which includes all four prices for each day, has been the daily bar chart. This is called a bar chart because each day is represented by a vertical bar which goes all the way from the low price to the high price. […]

Types of Chart Line Charts The first charts you were introduced to, in Module 1, are called line charts because they represent the progress of a price over time by a single line which goes up and down. This line is based on the closing price of the stock each day. Line charts make up […]

Module 2 – Charting Basics Introduction to Charting Charts are an invaluable tool for stock and spread betting traders. Indeed, I would say that any time that you as a trader spend studying price charts will be worthwhile. Chartists study the recurring patterns that occur in stock prices, because these tend to repeat time and […]

Doubts about Dow While much of what Dow wrote can be recognized in some form in modern-day technical analysis, it has inevitably been criticized in the light of later thinking. Considering that Charles Dow made his observations more than 100 years ago, it perhaps should be considered more astonishing that so much of his work […]