From this week’s MarketVision Chronicle, I explain how stock charts are visualized.
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Stock charts are brought to life in different ways. The information they convey is critical, but tend to confuse the lay observer. Let’s take a quick look at the different ways charts are represented:
Line charts have the stock closing price on the Y Axis, with the date on the X Axis. This is the simplest kind of chart.
Note that much of the information is lost here – stocks are open all day, did they open below the previous close and go up? Or did they go the other way around? What about the high price or the low price of the day?
The answer’s found in an OHLC chart (Open-High-Low-Close) – also called Bar Charts.
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Prices may move up or down. But they will fluctuate. There will always be a random element to every price change. That randomness cannot be avoided or suppressed.
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