OHLC & Candlestick Bar Charts

This is the second in a series of articles starting with the October 2, 2006 article entitled "Trading With Charts".

Charts are a way of organizing data about trades that have occurred.

OHLC bar charts are the most commonly available from data providers. In an OHLC chart, each bar represents the price range during a specific segment of time. For example, over a 5 minute segment of time, the bar shows the high and low during that segment of time. Additionally, the price of the first and last trade during that segment of time is shown by a dash mark on the bar.

Here's an example (click here) of an OHLC bar chart.

Candlesticks are another commonly available bar chart. The bars in a candlestick chart include the information presented in the OHLC bar except with color coding. The price range between the open and close are colored. Additionally, candle wicks are used for part of the price.

If the open was higher than the close (prices went down over time), then the price range between the open and close are colored red, while candle wicks in the bar depicts the price range from high to open at one end and low to close at the other end.

If the open was lower than the close (prices went up over time), then the price range between the open and close are colored green (or merely outlined but not completely colored), while candle wicks in the bar depicts the price range from high to close at one end and low to open at the other end.

Here's an example (click here) of a candlestick chart. The color used by Yahoo for this candlestick chart are blue instead of red and black outline instead of green outline.

We'll chat again soon ...

Copyright 2006 Raymond T. Lee. All rights reserved.
Leisurely e-Mini Futures Trading
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