Trading Charts: Common Charting Periods

There are four types of trading charts commonly used by investors:

Trading charts and charting periods explained
  • Monthly Charts
  • Weekly Charts
  • Daily Charts
  • Intraday Charts

The different chart types illustrate a few ways price movement is expressed over a period of time. Now we will reverse that and examine price movement over different periods of time. You will notice that your view of a particular market can change drastically only by switching to a different time horizon.

Monthly Charts

These are trading charts that illustrate the movement of price over a long-term horizon. Monthly charts are most often used by long-term investors and will most often represent many years or even decades of price data for that particular security or market. Monthly charts are not often used by most traders, because the time horizon it represents is not always applicable to popularly traded time periods. This however, does not mean they are useless to all traders. In fact, a lot of the market’s "gems," or representations of a particular era, are forever recorded on monthly charts. As a rule of thumb, these charts are commonly used to analyze time periods in excess of four years.

The chart below illustrates the price action of XYZ over 2001 to 2009, expressed in monthly intervals. This means that each “bar” or "candlestick" in the picture represents the opening, closing, high and low prices for each month in that time period:

Monthly - 9 yr.

Weekly Charts

Like the monthly trading charts, weekly charts are used by traders and investors who have a longer-term time horizon. However, weekly charts come in quite handy to traders who are analyzing the intermediate-term time horizon as well. As a rule of thumb, weekly charts are commonly used to analyze periods in excess of six months.

The chart below illustrates the price action of XYZ over years 2007 to 2009, in weekly intervals. Each "bar" or "candlestick" represents the opening, closing, high and low prices for each week in that time period:

Weekly - 2 yr.

Daily Charts

Daily charts represent the price action of a market based on one-day intervals. Daily charts are perhaps the most commonly used chart by traders and investors. These are handy in analyzing the short to intermediate-term time periods, however, many traders use the daily charts for long-term analysis as well. As a rule of thumb, daily charts are commonly used to analyze periods in excess of six weeks.

The chart below illustrates the price action of XYZ in early 2009, in daily intervals. Each "bar" or "candlestick" represents the opening, closing, high and low prices for each day in that time period:

Daily - 6 mth.

Intraday Charts

In addition to the Daily charts, Intraday charts are also extremely popular in the trading community. Intraday charts illustrate the price movement of a market within the confines of the daily opening and closing bells of the markets.

While there are multitudes of ways we can look at intraday charts, the charts below are examples of commonly used intraday charts:

Intraday Hourly Charts

The chart below represents the price action of XYZ for a period of 25 trading days. Notice that the chart now includes more detailed data produced within the confines of each trading day. Each "bar" or "candlestick" represents the opening, closing, high and low of each one-hour interval for the time period. Hourly charts are commonly used for swing or short-term types of trades that last from a few hours to several days:

1 hr. - 3 weeks

Intraday 15-minute Charts

The chart below represents the price action of XYZ for a period of 4 trading days. Each "bar" or "candlestick" represents the opening, closing, high and low of each 15-minute interval for the time period. 15-minute charts are commonly used for day or swing-term types of trades that last from an hour to a few trading days:

15 min. - 4 days

Intraday 5 Minute Charts

The Intraday 5-min chart is one of the most common day trading charts used by the trading community. The chart below represents the price action of the S&P 500 for a period of 2 trading days. Each "bar" or "candlestick" represents the opening, closing, high and low of each 5 minute interval for the time period. 5-minute charts are commonly used for quick scalps or day trades that last from several minutes to several trading hours. Also, the 5-minute chart is very popular for use by longer-term traders in selecting efficient entry and exit points for longer-term trades:

2 Day 5 Minute Candle
5 min. - Intraday

Intraday 2-minute Charts

The intraday 2-min chart is very popular among day traders. The chart below represents the price action of XYZ for a period of 3 trading hours. Each "bar" or "candlestick" represents the opening, closing, high and low of each 2 minute interval for the time period. 2-minute charts are commonly used for scalping or day trades that last from several minutes to a few trading hours:

2 min. - Intraday

Intraday Tick/Trade Charts

Tick, or "trade" charts as they are sometimes known, are line charts that represent each trade the market executes. Time is not an issue on tick charts. Each new "point" on the line is represented by an actual trade of the market. In illiquid markets, the lack of trades will merely be represented by a flat line. In highly liquid markets, the tick chart is constantly on the move, tracking each trade with a line across time, and up or down, to instantly represent increases and decreases in price. Tick charts are often used by scalpers of the market, but are also used in regulation to track "out-of-the-money" trades that otherwise need to be corrected. The chart below is an example of a tick chart:

Tick Chart

As demonstrated above, a trader’s views of the market can dramatically change depending upon the time period he is analyzing. In preparing to trade, the analysis of the correct time frame is crucial. For example, to analyze a monthly chart in order to scalp the market does not make a lot of sense. Neither would it be prudent to take a long-term core position based on a tick or 5-minute chart. Traders, investors and technical analysts tailor their expectations out of the market to suit a particular time frame analyzed.

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