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Definition

The manner in which the five data points for a share are displayed in a chart. Every trading day, every share has a price for its high, low, open and close and it also has a volume traded. These five data points can be displayed by a charting software package in various different ways. The simplest style is a line chart which simply connects the daily closing prices for the share. A bar chart shows a vertical line connecting the high and low and then shows the open and close as horizontal ticks on that bar - usually with the volume traded shown below as a histogram. A candle stick chart is similar to a bar chart, with all four daily price points shown, but the body of the candle is a vertical candle while the high and low are shown as "shadows" above and below the bar. A point and figure (P&F) chart only shows the closing price in a chart designed to highlight changes in the direction of the trend. P&F charts are one dimensional because the date is not shown on the X-axis. A volume candle chart is the same as a normal candlestick chart except the width of the candle reflects the volume traded on the day. We suggest that you choose a charting style which you like and stick to it so that you can become familiar with its nuances and get good at interpreting it.

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