Bar charts are one of the most popular types of trading chart (the other being candlestick charts). Bar charts include all of the standard trading information (e.g. opening price, closing price, etc.), and they are easy to read and interpret.
Bar charts include several pieces of trading information, including the following:
- Open - The first price traded during the bar
- High - The highest price traded during the bar
- Low - The lowest price traded during the bar
- Close - The last price traded during the bar
By including the open and close, bar charts show whether the bar was an upward bar (i.e. closed higher than it opened), or a downward bar (i.e. closed lower than it opened). By including the high and low, bar charts also show the range of the bar (i.e. the distance between the high and the low of the bar).
Bar charts can be set to a variety of different time frames, not all of which are actually based upon time. Bar charts can be set to any length of time, number of ticks, amount of volume, or price range. Examples of short term time frames include:
- 1 minute
- 33 ticks (price changes)
- 500 volume (shares, contracts, etc.)
and examples of long term time frames include:
- 1 day
- 1 week
- 1 month
Each bar on a bar chart represents the trading that occurred during the time frame. For example, on a 1 minute bar chart, each bar shows the trading information for 1 minute, on a 33 tick bar chart, each bar shows the trading information for 33 price changes, and on a daily bar chart, each bar shows the trading information for 1 day.
Display and Configuration
Most charting software supports bar charts, and there are usually some aspects of the bar chart's display that can be customized. For example, some traders prefer their bars to be one color, while other traders prefer different colors for upward and downward bars. In the example bar chart shown above (view full size chart), the upward bars are colored green, and the downward bars are colored red, which are popular color choices.