103-04 Other Exotic Charts

There are a few other types of charts that you probably have never heard of before.  They are however quite useful and you would be required to learn them if you wanted to become a certified Technical Analyst.

 Point and Figure Charting P&F Charts

Point & Figure Charts are very unusual as they feature no time line along the bottom horizontal axis.  The Chart is made up only of price swings.  The vertical price bar is arithmetic and shows only units of price.  An “O” is plotted if the price moves down a whole price unit (for example 50 cents).  Then when the price changes direction and starts to move upwards an “X” is marked in each box.  This filters out smaller price moves and enables us to focus on trend quality.  Trend lines are always plotted either horizontally or at 45 degree angles.

Positives

P&F charts are an excellent tool for doing price target calculations.  Simple to learn and interpret, few price patterns to learn.

Negatives

Learning this type of charting can be easiest when performing the charting by hand.  That means you marking the “X” and “O” on a piece of paper.  This can also be very time consuming.  Few services offer Point and Figure Charts.

Market Profile Charts

Developed in the 1980’s by Chicago Board Of Trade Pitt Trader J. Peter Stiedlmayer.  The letters on the chart show time units.   “A” represents the first 30 minutes of trading, “B” represents the second 30 minutes of trading.  The point of control is the area (price range) at which the most trades occur during the day.  The value area is the price range at which 70% of the action happens.  When price is above and below the value areas this represents a possible ideal buying or selling point.

Positives

People who use market profile chart become evangelists to the cause.  They believe it offers unique insights into buy and sell opportunities.  It can be a good option if you are a quick fire day trader.

Negatives

Can require quite an effort in order to learn how to use them, and very few stock chart services offer this type of charting.

 

Stock Charts Section Summary

With the vast array of technical and fundamental data available you have a wealth of information at your finger tips.  Knowing how to use it is key.  As you can see there are many types of charts, the recommended ones are OHLC Bar, Candlestick Charts and Price at Volume Charts.  However, the choice is yours.

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here