Data-based intraday charts can improve how you trade
How do people keep up with the fast pace of intraday trading? For experienced traders, planning and analysis are key. They set up their strategies in advance, create stock wish-lists with day trading software, plan out their entry and exit policies, and lots more. To get help with the research and strategising, they turn to intraday charts.
Many intraday charts feature two key elements: stock prices on the Y-axis and time intervals on the X-axis. Intraday traders often look at five-minute, 15-minute, and 60-minute charts. Here, a vertical bar is printed for each time interval. If you look at a 15-minute chart, the bars are printed at 9:30 a.m., 9:45 a.m., 10:00 a.m. and so on until the close of trading at 3:30 p.m.
Such charts, when used via day trading software, can provide valuable signals about how a stock is moving. To add another layer of complexity to their analysis, traders also use data-based Vietnamese translators & interpreters. In such charts, a data interval is introduced. Tick, volume, and range-bar charts are common examples of such data-based charts. Here’s a rundown of how they can help you finetune your trading strategy.
Intraday tick charts
Tick charts enable you to gauge whether traders are interested in a particular stock. The data interval is a specified number of transactions. In a 233-tick chart, a vertical bar is printed after every 233 transactions. If market activity is high, many more bars will be printed within a relatively short space. Fewer bars appear when activity is low.
How tick charts help: Tick charts, especially when used via day trading software, allow you to ascertain the interest surrounding a stock. You can assess if there is a lot of market movement or if sluggishness has set in. If lots of bars are getting printed, you can get in on the action right away. If you spot a reversal on the cards, getting out becomes easier.
Intraday volume charts
Here, the data interval is the volume being traded. In a 1,000-volume chart, for instance, a fresh bar is printed each time 1,000 shares have been traded. Like with tick charts, more bars get printed on a volume chart in times of high activity and fewer bars when the markets are quieter. However, while tick charts provide only an indication of the number of trades, volume charts tell you exactly how many units are changing hands.
How volume charts help: By depicting the actual number of units traded, intraday volume charts give you a better handle on the liquidity of a stock. If volumes are low, the stock may be illiquid. High volumes signify high liquidity—and for an intraday trader, that is often reason to trade. Volume, when considered along with price, can also signal when trends are likely to reverse or come to an end.
Intraday range bar chart
Range bar charts help you read market volatility. A price range serves as the data interval here. For instance, if you have a 10-tick range bar chart, a bar will print each time the price moves by 10 ticks. Say, your starting price is 284.0. A bar will print if the price moves down by 10 ticks to 283.0 or up by 10 ticks to 185.0.
How range bar charts help: During times of price consolidation, fewer bars get printed. This makes it easier to view volatility minus the data relating to volume or market activity. Such charts cut out the noise of other intraday charts when the market is moving sideways.
Choosing a data interval
- Tick chart intervals are often numbers from the Fibonacci series like 144, 233, and 610.
- Larger numbers from the Fibonacci series (e.g. 1,597, 2,584) are used for volume charts. But volume charts may also feature large round numbers like 1,000 or 2,000.
- When picking an interval for a range bar chart, factor in the price movement. If the price moves within a narrow range (e.g. 200 to 202), the range should reflect this.
Day trading software can help
Charting tools can help you interpret data-based charts in a better way. That is why it helps to open an account with a broker like Kotak Securities that offers robust day trading software. Advanced charting tools will allow you to use multiple filters, scan a variety of technical indicators, view trends, and more. It can speed up your analysis and give you valuable insights.
If you are an intraday day trader, market data analysis probably takes up a huge part of your day. By taking advantage of day trading software and learning to read data-based intraday charts, you could speed up your research time and add more precision to your trades.
Stock price charts are the first layer of research for intraday traders. But tick, volume, and range bar charts can all give indications of interest in a stock, actual market activity, and price volatility. With a little practice, you should be able to pinpoint emerging trends, price consolidation and price waves, reversals, and a lot more. Taken together, all those insights can help you make better headway with your trades.