Charts Overview

Chart produced by Worden Bros. TC2007

Wow! By the end of this course, you should be able to explain and use the various parts of the 3-window chart shown here. We'll start with one piece at a time, first tackling price and then moving averages, followed by the indicators and of course volume.

You can find a number of free charting programs on the internet. I prefer to use one that charges me about $30 a month for the data. I'm able to update frequently during the day receiving 20-minute delayed data. Market fees for real-time data are higher and are available through your broker's site when needed.

Let's take a quick look at the MSFT chart from 2004. The price is shown on a bar with a small mark on each side of the bar. The left-hand mark is at the opening price for that day. The right-hand mark is at the closing price for that day or the latest price during the day. The top of the bar is at the day's highest price and the bottom of the bar is at the day's lowest price.

Along the right-hand side of the chart you'll find the price scale. The odd intervals are created by use of a logrythmic scale instead of a regular arithmatic scale. This is done to show equal intervals for equal percentage moves.

On the bottm of the price chart you'll find the date references, usually year and month. Most charting software will allow you to change the range of dates that you look at on a chart with some even showing price changes in intervals of minutes instead of days. The opposite is also common with price OHLC (open-high-low-close) shown for a week or even a month in one bar. For swing trading I use the daily chart over about 3 to 4 months and then take a look at the longer picture of a year or more before placing a trade. Often we get over excited by a very short-term chart where the longer term chart will help us see where the stock is in terms of long-term trends.

For now we'll ignore the middle window on the chart. The bottom window shows daily volume. Price without relative volume information is like black and white versus color pictures.