For trading in the future contract, technical analysis trading strategies are something that you need to know. The price chart is what makes the study of technical analysis and thus one needs to know how to master reading them. The price charts are broadly categorized into four types. These are the line chart, the bar chart, the point, and the figure chart and the candlestick chart patterns.
Each of these charts is used by traders. However, there are some that give you much in-depth information about an asset than the other chart types. It is important that you understand all of these chart types to judge what best works for you.
This is the most basic of the charts used in technical analysis. The line chart is plotted as a line where the piece points are the closing price for a particular time period. The time values are plotted on the X-axis and the price values are plotted on the Y-axis. The same convention is followed in all the chart types.
The price value is the closing price of the stock at a particular time period. So in case you use a 15-minute chart then the price that you see plotted is the closing price of 15 minutes. This does not show you the opening price in the 15-minute interval or the average price. The closing price is the default setting of the line chart. However, there are some trading tools that can let you customize it to the average or the opening price.
The line chart lets you get a quick overview of what the prices are doing over a given time frame. The disadvantage of using the line chart is that it does not show you the high, the low and the opening price of a particular time period. The line chart is plotted with the idea that the closing price is the most important price of the candle and thus it ignores the other price points in the interval. This makes its use limited in trading using technical analysis.
One way in which you can use the line chart though is to get a quick glance at the trend of the asset over a period of time. However, you cannot get any other details when using line charts and thus this makes it not very popular among the technical traders.
Learn more about the ways in which the line chart is used in technical trading. Read about the other chart patterns to know why the candlestick chart is the most preferred chart type used by the technical analysts.