I tried to be objective about letting you determine which type of chart type you preferred. I hope you really did work with all three types. Now I can tell you as I tell all my stock option trading coach clients, the majority of the time I use candle charts.
Candle charts go way back in history from trading in Japan. Candles are frequently referred to as eastern signals.
One of the reasons I use candle charts is that candles often give early signs of potential trend reversals. When a candle pattern agrees with a western technical sign such as a strong resistance or support area, or a crossing of the MACD, or a crossing of a significant SMA (simple moving average) or EMA (exponential moving average), then I really pay attention!
My next post will include a video showing various reversals of a downward trend. We will look at both candle patterns and western technicals.
Hello – I made a video for you that I hope will more clearly explain about the stock chart types – bar, candle and line. Let me know what you think.
PS Please click on the title of this post and it will open without the “categories” interfering. Once opened, click on the lower right icon to get the video to play full screen. I will work on my website format!
Most online stock charts will allow you to switch between types. The three main types are bar charts, candlestick charts and line charts. While traders seem to have strong opinions about their preference, I recommend that my stock option coaching clients be open minded about what works best for them.
A bar chart show the open price by the horizontal line on the left side of the vertical line. The closing price is on the right side of the vertical line. The top of the vertical line shows the high price of the day. The bottom of the vertical line shows the low price of the day. The color of the bar is green when the close is higher than the open. The color of the bar is red when the close is lower that the open.
A candlestick chart is normally green or red. If it is green, the open price is at the bottom of the green colored candle body and the close price is at the top of the green colored candle body. The vertical line below the body shows the low of the day. The vertical line at the top of the body shows the high. If there is no vertical line on top of a green candle, that means that the close price was the high price of the day.
A line chart often has red and green segments. You guessed it! Red for down and green for up. There is no data for open and close price. A line chart will quickly and easily give your eye a clear look at trends.
Check out your online stock charting package and experiment with these 3 types of charts. What are your preferences and why?
Vertical spreads confused me for months. I could not find help with understanding vertical spreads. I just could not get it, so I spent the time to teach vertical spreads to myself. Now the majority of my trades are vertical spreads, and I am profitable in 96% of those vertical spread trades.
If I could figure these out on my own, I know that you can. But why take the time and the frustration?
As a stock option coach, I can bring you up to speed in a session or two. Why not start making money now? These types of trades are easy to manage.
Questions about Bull Put or Bull Call spreads? How about using Bear Put or Bear Call spreads? Contact me today – Jo@TradingCoachJo.com