If you have the chance to read the business section of a newspaper, probably you have noticed a line graph that represents the movement of different currency or stock prices for that particular day. If you will try to visit the same business section in the same newspaper, you will notice that the line graph is not the same graph that you have seen yesterday, indicating that there are movements within the market for that day.

Graphs, or called charts (in economic analysis) is a type of graphical representation of tabular numeric data or given functions. It is used to show large data quantities and its relationship between each other and its respective parts in a manner that will be easily understood by readers. In other words, the raw data that usually come into the form of large figures or tabular numeric numbers can be easily expressed in the form of charts.

Although it is used in a wide variety of applications (governance, health services, electricity generation and distribution, and others), charting is commonly used on the economic market, especially in conducting technical analysis. Technical analysis is used to determine the performance of a security within the market (be it a commodity, stock, or any foreign currency) by evaluating its price movement (both past and present) in the market. It also involves the analysis of a security’s volume and open interest in a particular trading day.

Technical analysis primarily involves the study of charts or past price actions (or the movement of a security’s price and volume on a particular trading day). Typically, charts that are used in technical analysis represent the performance of a security on a series of prices over a set of time frame. For instance, a particular chart may show the commodity’s price movement in over a half year period, wherein each point in the graph corresponds to the closing price for the day the commodity is traded.

There are several things that you should be aware of when looking on charts that are used in technical analysis. These include the information entered to the charts such as the following –

. Time scale it refers to the time frame that is commonly found on the bottom of the chart, which may differ from seconds to decades. The most commonly used time frames are daily, weekly, quarterly, and annually.

Keep in mind that the longer the time frame (annually or by decade), the less the chart shows details. Every data point that you can see in the chart represents the closing price of the security or its low or high price, depending on the chart that you are looking into.

. Price scale it is typically found on the right hand side of the chart.

It illustrates the security’s present price and compares it to the recorded data points. It can be either constructed in a linear (arithmetic) or logarithmic way.

There are three main types of charts used in technical analysis which is used by traders or investors depending on the information that they look for and their individual skill levels.

These are as follows –

. Line chart it represents the closing price of a particular security over a time frame. A line is formed by connecting data points (which represents the closing prices over a time frame).

. Bar chart it illustrates the detailed information of line charts by adding several key data pieces to the data point. Such chart is composed of series of vertical lines that represents the low and high for each trading period, together with the closing price. The open and close are shown through the vertical lines with the horizontal dash.

. Candlestick chart it resembles just like a bar chart, only that it is constructed in a visual manner. It has a thin vertical line that illustrates the trading range within the period. It makes use of different colors to explain the scenarios happened during that trading period.

Charting used in technical analysis is important-it can never be disregarded for every point, line, or bar represented in this chart means either profit or loss for traders and investors.

Getting in the financial market means you will be investing your hard earned cash in an attempt to make a profit. This is why you should treat trades seriously and not something you should play around with.

You need to be sure of your investment in order to profit from it and minimize the risk of losing your money.

When investing in the financial market, you have to know that you have to lose money in order to gain money. As you probably know, businesses spendS cash to gain cash.

They spend it on advertising, and they spend it on the goods they want to sell. The same goes for the financial market. You will be investing money in order to gain money.

If you don’t spend money, your money will remain stagnant.

You should accept the fact that you will definitely lose some money in the financial market. But, if you do it right, you can cut losses and develop profit.

This is why there are tools that are being researched by investors in the market.

An example of one good tool to minimize risk and maximize profit is through technical analysis.

This is a tool that is supposed to predict the outcome of the market.

However, many people are still skeptical with technical analysis and consider it more as an art instead of exact science. There is no scientific proof that supports technical analysis.

But, since there are a few alternatives in predicting the outcome of the market, this tool can be used for speculation.

Technical analysis depends on charts to predict the outcome of a specific financial instrument, like stocks or currency. Many people are beginning to use this kind of tool in order to cut their losses and maximize their potential income. With this kind of tool, you can be sure that you will have a guide in your decisions.

You should be aware that every decision you make in the financial market will affect your income and losses, if you can act quickly, you can eventually gain profit and minimize losses.

The charts used in technical analysis will display the highs and lows of the market. A technical analyst will base their decisions on the price trend. They will predict the outcome of the market by basing it on the past actions of a particular stock, or currency.

There are three kinds of charts that technical analysts examine to determine where the prices will likely go. The first kind of chart is the simplest and the easiest to read. This chart is called line charts. This chart will show you the broad overview of the price movement. Since this chart only shows the closing price at a specified time, it can be very easy to pick out patterns and trends.

However, this kind of chart doesn’t provide the details that bar and candlestick charts can provide.

The second type of chart used is called the bar chart. This kind of chart will display the price spread in a specified time interval. It is easy to tell if the price rose or fell because it will show both the opening price and the closing price on that time interval. However, in order to read bar charts accurately, you will need software that will show real time bar chart streaming and has a zoom capability.

The next type of chart is called the candlestick chart. This chart is relatively similar to bar charts in showing the high highs, the high lows, the low lows and the low highs. However, the candlestick chart is much easier to read because it is color coded. It will be a great help in your analysis.

These are the charts used by technical analysts. With this charts, you can determine the price trend of a particular stock or currency. Basing from this charts, you can predict the future market for your stocks or the currencies you are holding.

Predicting the financial market’s future may sound impossible. But, what if you have the power to predict it or what if you have the ability to take a quick look of the financial market’s future?

This would be like a dream come true for traders.

With this skill, it will be next to impossible for you to lose your investment in the financial market. Whatever it is you are trading, knowing about the financial market’s future would be like knowing when and what to buy and sell. With this kind of skill, you can be sure that you can acquire a lot of profit from the financial market.

However, you know that this is impossible. You don’t have the powers to predict the future. But, one great tool that you can use can be the next best thing in predicting the financial market’s future.

This tool is called technical analysis.

Technical analysis is the art of studying charts and finding a trend in the past to predict the financial market’s future. Try to think of it as forecasting the market’s “weather” and know about the potential risk and potential profit that you can make in the future.

This kind of forecasting can act as a guide to your money making decisions. It will also act as a safety buffer in case you made the wrong decision.

With this kind of tool, you can really minimize the risk of losing money and increase your potential profit from a financial security that you are holding.

You should always remember that a technical analyst isn’t interested about a particular company’s profile when they want a stock. They are only interested about the price movement and discovering trends.

They base their analysis on charts and computations.

If they see a trend in price movement, the resistance level, and the volatility, they will speculate on where the stock will move next. It may be next year, it may be next month or it may even be in the next few hours.

The charts used in technical analysis can be a simple line chart, a bar chart and a candlestick chart.

These charts are used to give the technical analyst the visual information and as well as the technical information in order for them to predict the financial market’s future.

With these charts, technical analysts can study a particular security and by basing on the past trends and past price changes, they claim that they will be able to predict the future of the financial market.

However, you should always remember that technical analysis isn’t always 100% accurate. It is even considered more of an art instead of an exact science. You should keep in mind that you shouldn’t depend too much on technical analysis. You should also do a study of your own. You can also trust that “gut feeling” you have whenever you trade.

Sometimes, that “gut feeling” can be right.

It is recommended however that technical analysis should be used as a guide to help you in your decisions in the financial market.

Try and study the findings first, review it, and determine what move you want to make in the market.

If you do it right, you probably can have a glimpse of the financial market’s future.