Charting Basics: What is on the Financial Trading Charts?|ForexGen Tips

A picture speaks a thousand words, as the old maxim goes. This maxim holds just as true for charts.
Charting is the graphical expression of the behaviour of a stock over a period in time: Charts can be

used to afford a birds eye view of the historical, often repeated behaviour or to get up close and

personal with the current trading for you chosen time period.
The most basic charts are bar and line charts. If you are new to the trading game and not a Ph.D. in

Statistics, these humble charts are the way to go. In fact, even if you are an experienced trader,

bar and line charts probably still have a special place in your daily trading life. These charts are

simply indispensable.

Stocks have four different trading points throughout a day. They are: opening price (O), closing

price (C), absolute high price of the day (H) and the absolute low price of the day (L). All of these

points appear on the charts.

The opening price (O) is the first trade of the day. Individual traders tend to place orders when the

market opens, in reaction to the close of the previous day. This price will normally be based on

emotional decisions and could well indicate how the first half or the whole day of trading is going

to pan out. The closing price (C) is the last trade of the day. It is generally institutional

investors that place orders towards the close of the day. Unlike the opening price, the closing price

will normally be representative of decisions made by reason and research, not gut feel. The low (L)

and the high (H) of the day are pretty self-explanatory. The difference between the high and low on

the charts is referred to as the Range.

Purely looking at these five points on the charts will not be enough to plan future trades. You will

also need to be mindful of how control and commitment has influenced the charts and then figure out

what the trend is likely to be going forward.
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