What Are Price Charts?

US Investment Advisor | Raleigh Investment Consultant, LLC

A price chart is a graphical representation of price points plotted over a specific period of time. Charts can be referred to as time series plots. Price charts have the y-axis (vertical axis) representing the price scale and the x-axis (horizontal axis) represents the time scale.

Price moves from left to right. The data on the left side of the chart is past price performance; and the future price data will be plotted on the right side.

Charts are critical to analyzing a wide array of securities and forecast future price movements. Evaluating price charts is essential before trading securities that are traded publically such as stocks, ETFs, commodities, futures, market indices, cryptocurrencies, Forex, etc.

Although many chart types are available to evaluate price data, the most common one and critical one is the 'candlestick price chart', as shown in the figure above. The clues for future price predictions are hidden in past price movements. Price movement is not random but there is logical reasoning behind it. When you understand the price movement and the science behind it, it is easier to make consistently successful investment decisions.

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