Performance is central to determining the growth and progress of the business. Creating and maintaining statistics can help provide insight on the business’ level of performance and determine the measures that can be put in place to boost the business. It is important to develop and maintain statistical data. Regardless of the size of the business, technical analysis is still important. There are main tools that can be used to perform technical analysis of business data and this article provides a detailed coverage of such tools.
Charts have been established to be reliable tools of analysis of business data. Prices and related valuables can be effectively represented by the use of charts. Charting is a technical analysis method that involves quantitative representation of data on statistical charts.
Price charts present statistical data where prices are analysed in relation to a particular period of time. Basically, a typical graphical chart features two axes; the vertical axis (y-axis) and the horizontal axis (x-axis). On the y- axis is plotted the price scale while the time scale is located on the x- axis. The figures of the prices are then plotted in the field from the left to the right.
Having plotted the statistical data, interpretation and analysis can then be effected. There are different types of charts that can be utilized to provide different analysis of the data and each type demands unique plotting procedure. The common types of charts that can be used include line charts, open high low and close (OHLC) charts and candle charts. eToro can be useful in creating and analysing data using charts.
These are simplistic charts that are used to analyse price data. When creating these charts the prices are marked in the field creating points. The points are then joined by a single straight line. Line charts largely depend on the settings as some tools will automatically draw the straight line joining the points.
Line charts can be used to provide an interpretation with regard to the short term fluctuations in the prices. For instance, when the closing prices are plotted against a particular time period then the chart can help establish the trends in the price that has been registered.
These are statistical charts that provide a detailed price representation. In this chart, four different elements: open, close, high and low are plotted on the vertical axis. Having plotted the prices on the chart, an analyst can be able to identify if the business closed higher or lower than the opening price.
OHLC charts feature data plotted on both sides of the y-axis. The opening prices are plotted on the left side of the vertical axis while the closing prices are plotted on the right side of the axis. This way, it is easier to compare the opening and closing values and identify whether the business closed in a higher or lower price than the opening prices.
These charts resemble the OHCL charts but offer more clearer statistics as compared to the former. The chart features open prices on the left while the close on the right. In addition, the chart contains a body in that when the open is lower than the close, the body is hollow. When the open is higher than the close, the body is filled. The thin line between the body is known as the frame.
Charting as a method of technical analysis may vary depending on a number of factors. First is the time period where the prices can be plotted either over a short period of time or a relatively longer time period and thus can range from hourly, to daily, weekly and even longer time.