There are many types of filters - different chart styles, moving averages, and technical indicators. They reduce market noise and help a trader maintain objectivity through volatile swings, and highlight the most relevant price information. The charts presented on this site use a combination of three moving average calculations and two internal technical indicators to find spike highs / lows, and to determine pattern setups. As prices cross above or below certain filtered threshold values, this movement triggers signals that offer trading opportunities.
Each chart style focuses attention on particular details. Some choose to omit the high-low swings and only sample the closing price. Which style you choose is a matter of individual preference, yet also is dependent upon how much detail is required to make trading decisions. Color can also be added to provide additional clues, often to highlight a series of data points within a trend. Candlesticks use combinations of two or three bar sequences in an attempt to gauge future direction, and require intraday range information in order to present a complete picture. This charting style is often prefered by short-term traders. Contrast this with point and figure chartists who look for demand and supply, yet only use closing price and threshold rules to trigger buy and sell signals. This long-term investment approach has been espoused by Dorsey Wright with considerable success.
|The default style are candlesticks - a single quote presents information on the high, low, open, and last price. The green or red color is an indication of the relative change from the previous day's close.|
The second graph style is the high-low-close, or more commonly known as a barchart. It records the high and low price range along
with the closing tick mark. Color is added based upon a trend-following indicator to highlight momentum conditions - up
(green), down (red), and consolidations (gold).|
A line chart eliminates all intraday fluxuations by drawing only the final price for the day.
It offers the best view to highlight market structure.|
|Point and figure charts filter out not only intraday, but also day-to-day swings. Closing values are plotted on grid using "X" and "O", the letter indicating either a buy or sell signal. The fixed horizontal time scale is removed to highlight trendlines which are drawn in blue or red to distinguish between rising or falling prices.|
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