Day Trading Basics: What Bar-Style and Conventional Price Charts Have to Offer

Day traders all develop their own personal preferences and approaches as they become more comfortable and accomplished with this style of investing. While there are plenty of solid principles and strategies beginners can use to get started, day traders end up acquiring unique tools and techniques as they build up experience.

The best way to make sure this typically helpful type of development can happen is to always be aware of the various options at every stage of the process. For many day traders, for example, understanding what different scales and kinds of trading charts have to offer can make it much easier to figure out which work the best for that individual, as those who see will understand.

Price Chart Time Scales and Styles Matter a Great Deal

Many day traders get started by learning to analyze and act on simple price charts that track movements over periods of fifteen minutes or less. Charts like these tend to provide a fairly illuminating view of what is happening with a stock, but they really represent only one important class of options.

More advanced traders almost inevitably start making use of bar-based price charts, whether as a main focus or to supplement conventional ones. Instead of representing a set period of time, the horizontal axis of a chart like this proceeds according to a set number of price movements at each tick.

When a given stock’s price has moved eight times, for example, a bar-style price chart will add another symbol to describe that series of movements. Instead of a set period of time being the determining factor, charts like these allow investors to focus more intently on price movements.

Putting Charts Together to Arrive at the Bigger Picture

As a result, these two types of charts each bring distinct things to the table. Where a conventional price chart will give an investor a better feel for the pace of trading in a stock and how that is being reflected in its pricing, a bar-based chart will provide more immediate insight into how particular price movements influence others that follow. As a result, most day traders will end up using both kinds of charts regularly, with each investor developing their own preferences and priorities.