For a technical analyst, viewing historical market data is paramount, and this is achieved through trading charts. Such charts present various data, predominantly market prices, volume, and technical indicators.
Here are some of the most frequently used trading charts
Line Chart
This is the most basic chart form, showing closing prices over time as a singular, unbroken line.
Candlestick Chart
Candlestick charts are predominantly favored by traders. In contrast to line charts which typically show a sequence of closing prices, candlestick charts depict candles that provide information on the opening, high, low, and closing prices.
The segment between the opening and closing price is termed the body of the candle, whereas the slender lines linking the high/low prices are known as wicks or shadows.
A bullish candle emerges when the closing price exceeds the opening price, whereas a bearish candle appears when the closing price is beneath the opening price.
Heikin-Ashi Candlesticks
These candlesticks offer a refined version of the traditional candlesticks, filtering out abrupt price changes and hence, simplifying analysis.
Danger
It's vital to understand that heikin-ashi candles don't represent actual market price values. It's not advisable to backtest strategies using heikin-ashi since the outcomes could be skewed. Further details can be found here.
The values presented by heikin-ashi candles are computed as follows:
- HA Open
- HA Close
- HA High
- HA Low
TradingView enables users to observe the genuine opening and closing prices on a heikin-ashi chart by choosing the Show real prices on price scale option (instead of the heikin-ashi price) within the chart preferences.
Due to the smoother characteristic of heikin-ashi charts, indicators applied to them often yield fewer false signals.