Common Chart Types

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Overview

Price charts are a trader’s “map” and “eye chart”:

• Horizontal axis (X-axis): usually represents time (minutes, hours, days, weeks, months)
• Vertical axis (Y-axis): represents price
• Chart type: determines whether you see a “simplified price path” or a “detail-rich bull-bear battle”

Different chart types are like different camera angles of the same game:

• Line chart: you watch the scoreline trend—simple and clear
• Bar / candlestick chart: you see the scoreline and the back-and-forth on the field
• Point & Figure: you ignore the play-by-play and only record moments when the “score changes materially”

The goal of this section is to help you:

• Understand what each chart type “records” and what it “leaves out”
• Know which chart fits which scenario
• Avoid common reading mistakes (e.g., “too much information makes it harder to see”)

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Chart Types

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Line Chart

1. Features A line chart typically uses only the close to draw:

• One price is taken at each timestamp (usually the close)
• Those points are connected to form a “price curve”
• It does not show the period’s high, low, or open

Pros:

• Extremely simple, easy to see the overall trend
• Less noise; not distracted by short-term spikes and wicks
• Commonly used by non-professionals and long-term investors

Cons:

• By focusing only on the close, it ignores intraperiod swings and high/low information
• For intraday or short-term traders, it may be insufficient

2. When to use it

• Macro trend view:
  • Looking at an index over the past 5–10 years: bull markets, bear markets, ranges
• Multi-asset comparison:
  • Overlay multiple line charts on the same plot to compare relative performance (e.g., a stock vs an index)
• Explaining to non-professionals:
  • Showing people unfamiliar with candlesticks the “overall up/down story”

You can think of it this way: line charts are great for “seeing the mountains from afar,” not for “inspecting leaves up close.”

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Bar Chart

1. Features A bar chart is typically an OHLC (open-high-low-close) representation:

• Each time period is shown as a “vertical line + small horizontal ticks”:
  • Top of the vertical line: high
  • Bottom of the vertical line: low
  • Left tick: open
  • Right tick: close

It records the full price range within the period. Pros:

• More informative than a line chart: includes highs/lows plus open/close
• Lets you roughly gauge bull/bear pressure:
  • Close above open: bullish bias
  • Close below open: bearish bias
• More “neutral” visually than candlesticks, with fewer color cues

Cons:

• Slightly higher learning curve; less intuitive for beginners than candlesticks
• When dense, it can be harder to read quickly

2. When to use it

• Professional traders accustomed to OHLC charts
• Investors who want full price information but don’t rely heavily on colors and pattern names
• In some traditional Western technical-analysis systems, bar charts are still commonly used

You can think of it as: a bar chart is an enhanced line chart with range information.

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Candlestick Chart

1. Features Candlestick charts originated in Japan and are the most common “K-line” charts:

• Each period consists of a “body + upper/lower wicks”:
  • Top of the body: open or close (depending on direction)
  • Bottom of the body: the other price (open or close)
  • Upper wick: the area between the high and the top of the body
  • Lower wick: the area between the low and the bottom of the body
• Different colors are often used to distinguish up vs down:
  • Up: hollow body or a certain color (red/green depends on the platform)
  • Down: filled body or another color

It simultaneously reflects:

• Open, close, high, low
• The comparison and transitions of bull/bear strength within a single candle

2. Uses and advantages

• The main battlefield for short-to-medium-term traders:
  • Convenient for observing single-candle patterns (hammer, doji, etc.)
  • Helps interpret shifts in bull-bear strength over time
• Pattern analysis:
  • “Bullish engulfing,” “morning star,” “evening star,” etc. are experience-based rules built from candlestick patterns
• Combines with moving averages, volume, indicators to form a full technical-analysis framework

3. Notes

• Don’t over-believe single-candle or two-to-three-candle patterns:
  • Without trend context and location (high/low/midrange), patterns have limited meaning
• The same pattern can mean very different things in different regimes:
  • In a bull market, a long upper wick doesn’t necessarily mean a top
  • In a bear market, a long lower wick doesn’t necessarily mean a bottom

In one line: Candlesticks are more like an “emotion recorder,” useful for observing short-term bull-bear battles.

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Point & Figure Chart

1. Features Point & Figure (P&F) charts are somewhat “old-school” but distinctive:

• Time is not emphasized:
  • The horizontal axis is not a fixed time interval
  • The chart only “moves one step” when price changes by a defined amount
• Focuses only on price movement magnitude:
  • Rising is marked with “X” and added upward in a column
  • Falling is marked with “O” and added downward in a new column
  • A “column switch” happens only when price reverses by more than a preset amount (e.g., 3 boxes)
• Filters small fluctuations to emphasize “trend” and “meaningful reversals”

2. Uses and advantages

• Noise filtering:
  • It does not record every small fluctuation—only “meaningful moves”
• Emphasizes:
  • support/resistance levels
  • breakouts
  • trend continuation and reversal
• Used by some medium-to-long-term, trend-oriented traders as a supplementary tool

3. Practical reality

• For most retail investors in China, P&F is relatively niche
• Many mainstream trading platforms don’t show it by default; it may require specific software or plugins
• If you already have a solid grasp of candlesticks and trends, you can treat P&F as a “noise-reduced trend view”

You can think of P&F as: a price path that “records big strides and ignores tiny steps.”

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Core Concepts

Before using these charts, a few shared foundational concepts matter:

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1. Timeframe (Period Granularity)

Common timeframes:

• Minute-based: 1, 5, 15, 30, 60 minutes
• Daily, weekly, monthly
• Some platforms also support “custom periods” like 2 hours, 3-day candles, etc.

Timeframe determines:

• How much time one candle/bar represents
• Whether you’re looking through a “magnifying glass” or at a “map”

In general:

• Shorter timeframe → more noise → useful for short-term trading
• Longer timeframe → clearer trend → more informative for medium/long-term investing

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2. Price Data Structure (OHLC)

Regardless of chart type, most are built on four key data points:

• O: Open
• H: High
• L: Low
• C: Close

The difference between chart types is:

• which data they use
• how they visualize it

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3. Linear Scale vs Log Scale

• Linear scale:
  • equal spacing for equal price changes
  • suitable for short-term, small-magnitude moves
• Log scale:
  • equal vertical distance represents the same percentage change (e.g., always +10%)
  • suitable for long-term, large-scale trends (especially doubling or multi-fold moves)

For example:

• 10 to 20 is +100%
• 100 to 110 is only +10% On a linear chart, the latter can look just as “big,” but a log scale correctly reflects the difference.

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4. Adjusted Prices (For Stocks)

In stock charts:

• Raw prices can “gap” due to dividends, rights issues, stock splits/bonuses, etc.
• Price adjustment (forward-adjusted / backward-adjusted) makes the price curve more continuous and helps analyze the true return path

For trend reading and technical analysis, most people use forward-adjusted prices.

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Practical Applications

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Case 1: For the same stock, what changes when using different charts?

Suppose a stock over the past year experienced:

• Early consolidation → a sharp mid-stage rally → late-stage high-level chop and pullback

You can:

1. Use a line chart to view the year:
   • You clearly see “up first, then a pullback,” but you can’t see the violent swings in between
2. Use a daily candlestick chart:
   • You can see consecutive long bullish candles and volume expansion during the rally
   • You can see long upper wicks and volume-backed stalling at the top
3. Use a weekly candlestick chart:
   • It “compresses” small noise and shows the primary trend and key support/resistance more clearly

Conclusion:

• A line chart is useful to quickly see “what roughly happened”
• Candlesticks are then used to “zoom into details and judge with price-volume context”

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Case 2: How to choose chart types by trading style?

• Long-term investors (holding 1+ year):
  • Mainly: monthly/weekly + line chart / simplified candlesticks
  • Focus on fundamentals; charts only help with entry timing (avoid obvious sentiment extremes)
• Swing traders (weeks to months):
  • Primary: daily candlesticks + volume + moving averages
  • Secondary: weekly trend to set the big direction
• Short-term / intraday traders:
  • Use: minute candlesticks (1–15 minutes), intraday time-and-sales/line
  • Sensitive to candlestick shapes, volume, order flow
  • Emphasize execution and risk control

Point & Figure is best as a “supplementary viewpoint”:

• When short-term noise starts messing with your mindset,
• look at the P&F trend and key breakout levels to return to a “purer price perspective.”

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FAQ

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Q1: Which chart is the most “professional”? Should I use only one?

Answer: There is no “most professional” chart—only the chart that best fits your question.

• Line chart: good for direction and simple comparisons
• Bar / candlestick: good for trading decisions and reading bull-bear pressure
• Point & Figure: good for filtering noise and focusing on key breakouts

A more recommended approach:

• One primary chart type + one or two supporting views
  • For example: use daily candlesticks as the main view, and switch to a weekly line chart for trend context
• Rather than:
  • Opening ten different chart windows for the same stock and confusing yourself

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Q2: Why does the same stock look slightly different across platforms?

Common reasons include:

• Different data sources (missing data filled, different interpolation rules)
• Different adjustment methods (unadjusted, forward-adjusted, backward-adjusted)
• Differences in time zone / trading session settings (especially overseas markets and FX)
• Different rules for handling halts, circuit breakers, and abnormal prints

Therefore:

• For short-term traders: try to stick to one consistent data source and platform
• For medium/long-term investors: small differences matter less; focus more on trends and key price zones

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Q3: Point & Figure looks complex—do I need to learn it?

Answer: Not necessary for most retail investors, but it can be an advanced interest.

• If you’re still getting comfortable with basic candlesticks, trendlines, and support/resistance:
  • Prioritize mastering “candlesticks + timeframe + price-volume”—more practical
• When you start feeling “there’s too much noise” in standard charts:
  • Consider learning P&F, range bars, and other “non-time-driven charts” as a second viewpoint

The best way to learn investing is “from simple to complex, then from complex back to simple,” not to overwhelm yourself at the start.

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Summary

• Charts are a “compressed expression” of price data; different chart types emphasize different information:
  • Line chart: simple structure, good for big trends
  • Bar chart: adds high/low information, more neutral
  • Candlestick chart: the most common trading chart, good for observing bull-bear battles
  • Point & Figure: ignores time and focuses on meaningful price changes
• When choosing a chart type, ask yourself:
  • What problem am I solving? (trend view? entry timing? sentiment? )
  • What is my holding period and trading frequency?
  • How much information can I realistically process?
• Don’t believe “complex = advanced”:
  • For most traders, mastering one primary chart, using it deeply, and building your own process matters more than knowing many flashy chart types.

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Further Reading

• Japanese Candlestick Charting Techniques — Steve Nison
  • A classic candlestick beginner-to-advanced resource explaining K-line patterns and applications systematically
• Technical Analysis of the Financial Markets — John J. Murphy
  • A comprehensive technical-analysis reference covering multiple chart types and indicators
• Point and Figure Charting — Thomas J. Dorsey
  • Focused on P&F applications; useful for trend traders
• Official tutorials or videos from major brokerages and trading platforms
  • Search for “chart usage guide,” “candlestick basics,” etc., and cross-check with real platform interfaces to understand the content above