Line charts are what you typically see on the TV or in newspapers. They represent price action by a single line.
They only show the closing prices of the stock and are of little use to traders. Because they do not show what has happened during the day.
Bar charts represent both the open and close prices. In addition, they include the high and low of the day. These four prices are critical for your full analysis of a stock's price action.
Candlestick charts show us all the price information of a bar chart but in a far more graphical and clear way.
The “story' of the stock literally jumps out at you.
When we were first introduced to trading it was with bar charts. However, when we discovered candlesticks a few years back we immediately saw the clarity and detail that they provided.
They may seem a little strange to you at first but do persevere. We can assure you that they are the only sort of chart to use!
In addition, candlestick patterns, particularly reversal patterns are one of our favorite tools in chart analysis. Doji, shooting stars and inverted hammers may sound a bit weird at first but they are some of the best friends a trader can ever have!
Therefore, if you are not familiar with candlestick charts and patterns I would strongly suggest that you learn more, now.
In addition, the VERY BEST explanation of candlesticks [apart from the SMG Tutorials of course!] is Louise Bedford's “The Secret of Candlestick Charting”. It is on our booklist in: www.stockmarketgenie.com/resources
The above comments are offered for educational purposes only. We are not providing you with financial advice. We are simply sharing with you what has and has not worked for us personally. If you wish to trade or invest in the stock market, you should obtain advice from a registered licensed advisor.
