For intraday traders, day trading charts are the most important tool. Different charts such as Renko, Heikin Ash, etc. with different time frames (i.e. 5 minutes, 10-minute or per tick charts) can be a little bit difficult for understanding, but intraday stock charts are the most effective tool to understand the movement of the market. It helps day traders for their daily technical analysis to predict the movement of price. Charts give detailed information about open, low, high and close of the stock in the different time intervals.
Here in this blog, Nifty Trading Academy will discuss in detail about intraday trading chart types that will help you to understand how to setup and interpret charts.
Different Types of Intraday Stock Charts
Intraday trading charts gives information which is a combination of price, volume and time intervals. The chart of a particular best time frame for intraday to shows the price movement of that specific time frame. Now, let’s see the best charts for intraday trading:
Line Charts are simple type of intraday trading chart that gives the only closing price. It can be switch to any time frame but in every time frame, this chart only displays the closing price. For example, in 5- minute time frame, each closing price after 5 – minutes of time interval will then be connected to the next closing price with a continuous line.
A line chart is useful for observing the long-term trends and different chart patterns such as the double bottom, double tops, etc. But line charts are very simple as they do not provide more information about the intraday price movement.
Bar charts are one type of time-based day trading charts. For each time interval, open, high, low and close price are used to build a price bar for the specific time frame. Bar charts are also known as the OHLC charts.
As you can see in the below image each bar is made up of a vertical line that joins the high and low price. The extended left at the opening price and a short horizontal line extending at the closing price also connected with the vertical line. Green bar indicated the increasing in price where red bar indicates that price is decreasing.
Candlestick charts are one of the most popular types of intraday trading charts. There are four price in candle open, low, high and close. For 1-minute time frame, you can see 1-minute candle for 5-minute time frame candles are generated for 5 minute time period. A candle is consists of upper tail, lower tail or wick, and body. The green candle is also called a bullish candle show the price is moving in an upward direction and the red candle (Bearish candle) indicates the price is decreasing.
Candlestick chart provides more information as compared to other types of intraday stock charts. And different types of candles i.e. hammer, doji, etc. helps traders to predict the future price movement easily. Day traders look for pattern formation in candlestick charts for trade signals and it also helps traders to manage their risk with a clear idea of right stop-loss and target price. Candlestick chart is also known as 5 minute candlestick chart.
Volume charts are very important specially for intraday trading because these charts show the level of market activity. Volume in the chart indicates the quantity of stocks is placed at a time, with the combination of volume and candlestick chart, traders can easily get the right prediction on the price movement of stock.
Point and Figure Charts
Point and figure charts are the simple but effective intraday trading chart. It focuses only on the specific price moves. The ‘X’ in the charts shows the rising price and ‘O’ indicates the falling price.
The ‘X and O’ symbols are placed in a box which represents an incremental time period i.e. one day or a range of days. The uniqueness of point and figure chart is the time period input is not used on liner basis. A new Column is made, as soon as the price rises or falls beyond a level. This type of chart is mostly useful in daily and above time frame.
Renko word comes from Japanese word ‘renga’ which means bricks. Renko charts will only shows the price movement. A new brick is formed when the price moves more than the brick size away from the preceding brick size. Renko charts highlight the trends only it doesn’t show the exact price action. Therefor the Renko charts are useful to identify intraday trends in effective way and also help to identify key support and resistance levels.
Kagi charts are effective for intraday trading. This type of chart does not include time aspect and line in this chart indicates the price movements by its thickness. If the price is higher than previous swings, the line will thicken and when, it below the previous swing than the line will thin. These charts help traders to clearly identify the break-out of swing highs and lows.
Timing Setup for Intraday Trading
All the different intraday trading charts have a time frame. Especially, for day trading 1, 5, 15 and 30- minute timeframe is suitable. In the time frame of 5-minute, after every 5-minute a new price bar will form and shows the price movements for those 5 minutes. As per different intraday trading strategy, traders use different time frame. Time interval and charts are the important and fundamental aspect of technical analysis. According to your strategy and information required for your trading, you can select best time frame for intraday and chart type.
Along with the intraday charts the technical indicators such as volume, moving average and different charting patterns helps traders to get right time to enter in trade and where to put right stop-loss. Also, it is very useful for day trader to manage their risk, which is important factor for day trading.
[Also Check: Fundamental Analysis of Indian Stocks ]