Line charts are a popular type of day trading chart, but not one of the most popular. They only include one piece of the standard trading information (usually the close), but they are easy to read and interpret. Line charts are supported by most charting software.
Trading Information
Line charts include one piece of trading information, which is usually the close (the last price traded during the timeframe), but depending upon the charting software's options, could include any one of the following :
- Open - The first price traded during the timeframe
- High - The highest price traded during the timeframe
- Low - The lowest price traded during the timeframe
- Close - The last price traded during the timeframe
If a line chart includes the close, it shows whether the timeframe was an upward timeframe (i.e. closed higher than it opened), or a downward timeframe (i.e. closed lower than it opened), but not in as much detail as either bar or candlestick charts, which include both the open and close. By not including the high and low, line charts do not show the range of the timeframe (i.e. the distance between the high and the low of the Line).
Timeframe
Line charts can be set to any length of time, number of ticks, amount of volume, or price range. Popular short term timeframes include :
- 3 minute
- 99 tick (trades)
- 1000 volume (contracts)
and popular long term timeframes include :
- 1 day
- 1 week
- 1 month
Each point on a line chart represents the timeframe. For example, on a 3 minute line chart, each point shows the trading information at the end of each 3 minutes, on a 99 tick line chart, each point shows the trading information at the end of each 99 trades, and on a daily line chart, each point shows the trading information at the end of each day.
Display
Most charting software supports line charts, and there are usually some aspects of the line chart's display that can be customized. For example, some day traders prefer their lines to be one specific color, while other day traders prefer different colors for upward and downward timeframes. In the example line chart shown above (view full size chart), both the upward and downward lines are colored green.
