How to understand Chart styles

TECHNICAL ANALYSIS :

This second type of analysis is the one we use to develop our trading system revealed in this book.

Too many people think technical analysis is about recognizing patterns and candle formations but the true is that it is really about understanding the sychology of money flows and making informed timing decisions eith an emphasis on risk management.

One thing that is very important to say is that each person builds their own personal trading system, some systems that work for others will not work on you.

What we want you to do after reading this ebook is to give you a “template” to build your own system based in supply and demand and price action.

HOW TO UNDERSTAND CHART STYLES

Graphic line

On each session closing price is indicated on a graph. It is worth mentioning that according to temporality, the graphics update will be different.

In a temporality of 4 hours, the graphic will be updated every 4 hours, while in one day, it will be updated once a day. This type of graph is helpful to easily find key points. In the following chapters, we show you how.

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Bar Charts

The bar graph presents much more information than the line graph. We can see the opening price, the maximum price, minimum and each session closing price.

For example, let’s say you set your graphics to a temporality of one hour, each bar represents what has happened over an hour on the graph. If you study the charts in higher time frames as daily, each bar represents 24 hours.

The bars are made of an opening price, the highest price of the section, the lowest price and finally the closing price.

The bars are independent and none is linked to another.

The following chart is a graph in 4 hours (240 minutes). Therefore, each bar corresponds to what happened every 4 hours.

In this example, the red bar does not change but the black bar corresponds to the green bar.

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Japanese Candlestick Chart

This type of chart shows exactly the same information as a bar chart, but in a more visual format. This type of chart is currently the most widely used and the one we will use to find opportunities. If You can not understand it, do not worry at the end of this book, you will understand. In the following chapters, we teach you how to interpret and master this type of chart.

The following chart is a graph in 4 hours (240 minutes). Therefore, each "Japanese candle" is what happened every 4 hours. In this example, the green candle is the candle blue and red will not change.

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