As you learn about the stock market and technical analysis you will eventually learn about the different types of stock market charts that are available to stock traders. In today’s article we discuss four different types of stock market charts including line chars, bar charts, point and figure charts, and candlestick charts.

Line Charts – the line chart is the most basic form of price display and it is created by connecting a series of data points together with a line. The only price that is used however is the closing price for a stock in each time period. Most traders don’t use line charts because they don’t think they contain enough price data while other traders like these charts because it ignores intra-period price swings. Either way it is safe to say that less and less traders are using line charts.

Bar Charts – the bar chart show movements in the price of a stock, or other financial security, over a specific amount of time. That time frame can be one hour, a day, one week, or more. On a daily chart, each bar represents the open, high, low, and close for the day. Different colors may also be used to represent rising or falling prices. Basically, the tick marks that come out fro each side of the line indicate the opening price (left), and the closing price (right) for a specific time period.

Point & Figure Charts - the point and figure chart emphasizes the closing price, and isn’t concerned with time or volume. Plotted on this chart is the price movement, otherwise known as the “unit of price.” An X is used to mark any increases in price and an O is used to mark any lower prices. The point and figure chart does not contain a time or price axis. This chart is used to spot trends and reversals but they offer little information on how long it takes to meet profit objectives.

Candlestick Charts – the candlestick chart was invented over 300 years ago in Japan was originally used to forecast the prices of rice. They are now the most widely used and popular stock market charts and they display the open, close, high, and low prices for a stock, or other financial security, each day over a specific period of time. Candlestick patterns are formed such as the bullish engulfing pattern, the morning star, and the dark cloud cover, in order to predict price movements. They are considered to be the easiest and most visually appealing of all stock market charts.

Please continue to read about Japanese Candlesticks, a trading strategy used by some of the world’s most successful traders. It is the fastest way for new investors to quickly and accurately read stock market charts. Once you are comfortable with the major candlestick signals, expand your expertise by learning the secondary Candlestick Patterns. Combine these with your favorite technical indicators and you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or exchange traded funds.