Mountain Chart:
Mountain charts are the most basic of the available charts as they just connect the dots of all the closing prices. This chart gives us very little information and a technical analyst cannot do much with it. We will not use mountain style charts.
Open-High-Low-Close (OHLC) Charts:
OHLC charts are an option for a technical analyst. As its name would suggest, this style of chart gives the viewer data on the stock’s daily open, close, high, and low. To see how this works here is a graphic:
As you can see, the open of the day is the tick on the left side, the close is the tick on the right side, the high on the day is the top of the figure, and the low is the bottom of the figure. Investor’s Business Daily uses this type of chart for all their graphs.
Candlestick Charts:
Last but not least is the candlestick chart type. This is my personal favorite and the type I suggest you use when analyzing charts. Candlestick charts are very similar to OHLC but differ in the fact that candlestick fill in the area between the open and close to make what resembles a candlestick.
Here is how to read a candlestick chart:
There are a couple reasons why I prefer candlesticks to any other chart type:
- They are easier to read.
- Candlestick patterns exist and can be used to increase profitability.
Overall, it is up to you which chart type you use, but I suggest the candlestick type to maximize your chart analysis.
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