Skip to main content

​
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”)

​
Chart Types

​
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.”

​
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.

​
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.

​
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.”

​
Core Concepts

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

​
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

​
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

​
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.

​
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.

​
Practical Applications

​
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”

​
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.”

​
FAQ

​
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

​
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

​
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.

​
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.

​
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