The algo-trading software trades on the basis of a program that is fed into it. Learn more about it to know how the algorithm is written.
The trading action for any time period is recognized by its four major price points which are open, high, low and close. Technical analysis charts these and displays this information in a comprehensive way. The information is the key and you need a good charting method that makes it clear for you to understand these price points.
Each of the trading days consists of four main price points and this is called as OHLC. In case the chart you are looking at is a 10 day chart then you have to see 40 data points. This means that you can estimate the difficulty in seeing a monthly or a yearly chart because it consists of many price points.
Statistics uses many kinds of charts like the pie chart, column chart and the area chart. Unfortunately, these are of no use in technical analysis. Line chart, however, is used by some technical analysts to trade in the market.
The regular charting methods are not used in technical analysis and the sole reason is that they represent just one price point at a given time. Technical analysis however needs to display four price points at a given point of time.
The charting methods used in technical trading are broadly of three types. These are the line chart, bar chart and the Japanese candlestick chart.
The Japanese candlestick chart is what is popularly used in trading using technical analysis but before that it is also important to understand why the line chart and the bar chart do not serve the purpose.
The line chart is a basic chart type and it uses just one price point to be plotted. The line chart is plotted by using the closing price of the instrument. A dot is placed on the chart which is the closing price of the asset and these dots are then joined.
The bar chart is a little more versatile and it displays the four pints of price. Each bar consists of a central line, a right tick and a left tick. Even though the bar chart marks the four crucial data points used in trading it lacks a visual look. Because of this it becomes difficult to look at patterns on the chart and this is why the bar chart is also not used widely in trading using technical analysis.