InvestorQ : I understand that technicals are all about charts. What exactly do we understand by the term charts?
Swati Naik made post

I understand that technicals are all about charts. What exactly do we understand by the term charts?

Answer
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Ria Roy answered.
1 year ago


A chart is like any other graph that is a visual representation of stock price movement or index movement. It is like any basic graph that we use in basic mathematics, with the only exception that it has a lot more of analytics built into it. A stock chart is simply a visual representation of a security’s price or index over a set period of time. What you require is reasonable length of price / volumes data. Any security with price data over a period of time can be used to form a chart for analysis. For example, if a stock has a listing history of 3 months, then it is very difficult to get any meaningful technical trends out of the chart. You need a history of at least 5 years to be able to make meaningful technical analysis of stocks / indices.

Charts are based on the same approach of using the X axis and the Y Axis as we do in normal mathematical charts at a high school level. On the chart, the y-axis (vertical axis) represents the price scale and the x-axis (horizontal axis) represents the time scale. Prices are plotted from left to right across the x-axis with the most recent plot being the furthest right. The base point, where the x-axis and the y-axis intersect is normally called the zero-base point and any progression starts at that point.