How to use charts with automated trading platforms
Charting tools are essential for traders, providing graphical representations of an instrument’s price movement over time to help visualize information and identify market patterns and trends. Trading charts are sequences of price movements depicted graphically over specific time frames, with the Y-axis representing the price scale and the Z-axis the time scale. These charts are crucial for technical analysis and can also aid in fundamental research by showing the effects of economic and non-economic events on prices and indicating when an instrument is trading at high or low extremes. Types of trading charts include candlestick charts, which show open, close, high, and low prices along with market direction; line charts, which connect closing prices over time to identify long-term trends; bar charts, which use high, low, and closing prices (and optionally opening prices) to represent trading information; and tick charts, which represent intraday trading activity based on a specific number of trades, helping to reduce market noise.