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  1. Chapter - 3 Introduction to Charts Part I CMT LEVEL - I
  2. What is Charts? • Charts are simply graphical representations of a series of prices over time. •Charts are the most fundamental tool for technical analysts
  3. What is Charts? PRICE Y- AXIS TIME (AXIS)
  4. Chart Scale • The common denominator is that price is typically on the Y-axis and time is usually on the X-axis. • Time scale, Price scale, and Price point properties are used in the creation of the chart.
  5. TIME SCALE • The most frequently used time scales are intraday, daily, weekly, monthly, quarterly, and yearly. •Shorter timeframes are commonly used by day traders or investors looking for greater
  6. TIME SCALE Time Scale Significance (Trade Validity) Intraday Charts Trade Validity for Whole Day Daily (EOD) Charts Trade Validity for Week to Month Weekly Charts Trade Validity for Month To Quarter Monthly Charts Trade Validity For more than a Year Year Chart Trade Validity for More than a Decade
  7. Types of Price Charts Line Chart Bar Chart Candle Stick Chart
  8. Line Charts •Represents only closing price at the End of day •Do not provide information on trading range •Can be drawn also on open , low , high , close prices
  9. Line Charts
  10. Bar Charts •Represents whole price range of the day (HLCO) •Each Bar represent one day price action •On left side tick shows open price and on the right side shows close price
  11. Bar Charts
  12. Bar Charts
  13. Candle Stick Charts •Candlestick charts originated in Japan. •This charting method was used as early as the mid-1600s to trade rice futures in the Japanese markets •Thin line is called as shadow & Wider portion is called as Real Body. •Technical tools rely on the Colour and size of individual candlesticks to signal trades
  14. Candle Stick Charts
  15. Candle Stick Charts
  16. Candle Stick Charts •Candlestick charts are used by traders to determine possible price movement based on past patterns. •Candlesticks are useful when trading as they show four price points (open, close, high, and low) throughout the period of time the trader specifies. •Many algorithms are based on the same price information shown in candlestick charts. •Trading is often dictated by emotion, which can be read in candlestick charts.
  17. Benefits of Charts • Charts provide a concise price history • Charts provide the investor with a good sense of the market's volatility • Charts can be a useful tool to the fundamental analyst • Charts can serve as a timing tool, • Charts reflect market behavior that is subject to certain repetitive patterns • Charts can be used as a money management tool