Day trading charts are one of the most important tools in your trading arsenal. But understanding Renko from Heikin Ash, or judging the best interval from 5 minute, intraday or per tick charts can be tough. Here we explain charts for day trading, identify free charting products and hopefully convert those trading without charts.
This page will break down the best trading charts for 2018, including bar charts, candlestick charts, and line charts. It will then offer guidance on how to set up and interpret your charts. Finally, you’ll get top tips on where to get the best free and paid for charting software.
Brokers with Trading Charts
Best Charts For Day Trading
There are a number of different day trading charts out there, from Heiken-Ashi and Renko charts to Magi and Tick charts. Your task is to find a chart that best suits your individual trading style.
Each chart has its own benefits and drawbacks. However, day trading using candlestick and bar charts are particularly popular as they provide more information than a simple line chart.
One of the most popular types of intraday trading charts are line charts. But, they will give you only the closing price. You’ll still opt for a time frame, but the chart will only display the closing prices for that period, say five minutes for example.
Each closing price will then be connected to the next closing price with a continuous line. A line chart is useful for cutting through the noise and offering you a brief overview of where the price has been. However, you wouldn’t want to base your trading decisions solely on this data as essential information is missing.
Bar & Candlestick Charts
Most trading charts you see online will be bar and candlestick charts. They give you the most information, in an easy to navigate format. Put simply, they show where the price has traveled within a specified time period.
The size of the bar/candle depends on the time frame you have opted for. Let’s say that the price bar or candle is generated every five minutes. Bar and candlestick charts will show the price of the first transaction that took place at the beginning of that five minutes, plus the highest and lowest transaction prices during that period. In addition, you’ll also see the final (closing) price of that five minute period.
You’ll find more tips on finding the best intervals for day trading charts below.
Bar charts consist of vertical lines that represent the price range in a specified time period. The horizontal lines represent the open and closing prices. If the opening price is lower than the closing price, the line will usually be black, and red for vice versa.
Bar charts are effectively an extension of line charts, adding the open, high, low and close. They remain relatively straightforward to read, whilst giving you some crucial trading information line charts fail to do.
Day trading with tick charts isn’t common, but some traders swear by it. The bars on a tick chart develop based on a specified number of transactions. So, a 415 tick chart creates a new bar every 415 transactions.
They allow you to time your entries with ease, hence why many claim tick charts are best for day trading. They won’t be impacted by time, so in times of high trading activity you may have a bar form every minute, but in slow periods it may take several hours. This means in high volume periods, a tick chart will show you more crucial information than a lot of other charts.
If you’re day trading, a heikin-ashi charts pdf will probably come across your screen at some point. This form of candlestick chart originated in the 1700s from Japan.
So, why do people use them? Because they filter out a lot of unnecessary information, so you get a crystal clear view of a trend. This makes it ideal for beginners. But they also come in handy for experienced traders. The Heiken-ashi chart will help keep you in trending trades and makes spotting reversals straightforward.
If you’re looking to ease yourself into day trading with charts, then consider a Renko chart. ‘Renko’ comes from the Japanese word for bricks, ‘renga’. A Renko chart will only show you price movement. You won’t get any time or volume indications.
Once the price exceeds the top or bottom of the previous brick a new brick is placed in the next column. You’ll see white bricks when the trend heads upwards and black bricks when the trend goes down. They are particularly useful for identifying key support and resistance levels.
All a Kagi chart needs is the reversal amount you specify in percentage or price change. Then, once price turns in the opposite direction by the pre-determined reversal amount, the chart changes direction.
You’ll see different line widths in a Kagi chart. If the market gets higher than a previous swing, the line will thicken. Likewise, when it heads below a previous swing the line will thin.
Kagi charts are good for day trading because they emphasise the break-out of swing highs and lows. It’s also fantastic for finding support and resistance levels, enabling you to track market bias.
Online you’ll see a lot of day trading 1, 5, 15 and 30-minute charts. All chart types have a time frame, usually the x-axis, and that will determine the amount of trading information they display.
Whilst most are based on time, some will focus on numbers of trades. The most common are:
- Price range
A 5-minute chart is an example of a time-based time frame. Every 5 minutes a new price bar will form showing you the price movements for those 5 minutes. Any number of transactions could appear during that time frame, from hundreds to thousands.
Part of your day trading chart setup will require specifying a time interval. If you’re not planning to be glued to your screen all day, you’ll probably want to use a lower time frame. If you plan to be there for the long haul then perhaps a higher time frame would be better suited to you.
This is simply because if you’re trading for just a few hours, a 15-minute chart will only create a limited number of bars. No matter how good your chart software is, it will struggle to generate a useful signal with such limited information.
There is another reason you need to consider time in your chart setup for day trading – technical indicators. Not all indicators work the same with all time frames. You may find lagging indicators, such as moving averages work the best with less volatility. You might then benefit from a longer period moving average on your daily chart, than if you used the same setup on a 1-minute chart.
There is no wrong and right answer when it comes to time frames. Just bear in mind when you’re reading charts for day trading, firstly, how long will you be at your screen, waiting for signals to show? Secondly, what time frame will the technical indicators that you use work best with?
Understanding Day Trading Charts
So, you’ve set up your chart. But, now you need to get to grips with day trading chart analysis. There’s no use having a chart with all the answers if you can’t decipher the lines, ticks, and bars to get your hands on them.
Add too many indicators and you’ll be left with a sea of colours and lines that will only slow down the decision making process. Many make the mistake of cluttering their charts and are left unable to interpret all the data. Instead, consider some of the most popular indicators:
- Volume indicator – It won’t tell you which way the price will go, however, it will let you know if there is a significant number of transactions being made, and whether the big players are in the game.
- Simple moving average (SMA) – A 10-period moving average is one of the most prevalent indicators amongst intraday traders. It will highlight a significant price move early and show you in which direction. Opt for a slower moving average and you may lose profit when the trends ends or reverses.
- Average true range (ATR) – This paints an accurate depiction of volatility based on the actual price of the instrument. This gives you no choice but to assess each security on an individual basis. This helps ensure accurate trading decisions are made.
- Oscillators – This is a group of indicators that usually flow between the upper and lower bounds. They come in handy when a trend is not clearly visible. The most popular of which are RSI, MACD, and Commodity Channel Index (CCI).
With thousands of trade opportunities on your chart, how do you know when to enter and exit a position? You have to look out for the best day trading patterns. Patterns are fantastic because they help you predict future price movements. They work on the basis that, ‘history repeats itself’.
Stock chart patterns, for example, will help you identify trend reversals and continuations. You’ll usually find two themes in your chart analysis, breakouts and reversals. The former is when the price clears a pre-determined level on your chart. The latter is when there is a change in direction of a price trend.
Some of the most popular patterns are listed below.
- Morning consolidation
- Late consolidation
- Little to no price retracement
- Spring at support
- Outside bar at resistance or support
- Cup and handle
- Ascending triangle
- Descending triangle
- Triple bottom
- Head and shoulders
You can also find a breakdown of popular patterns, alongside easy-to-follow images.
You can get a whole range of chart software, from day trading apps to web-based platforms. Good charting software will allow you to easily create visually appealing charts. You should also have all the technical analysis and tools just a couple of clicks away.
Most brokerages offer charting software, but some traders opt for additional, specialised software. If you’re new to day trading using charts then the standard software you get from your broker should cut the mustard.
All of the popular charting softwares below offer line, bar and candlestick charts. They also all offer extensive customisability options:
- MetaTrader – It’s ideal if you’re looking for forex daily charts. Trading with these MetaTrader offers in-depth and easy to navigate charts. You also get a numerous time frames to choose between.
- eSignal – eSignal offers extensive customisability, but a relatively limited selection of technical indicators. It’s ideal for beginners looking to familiarise themselves with trading charts.
- NinjaTrader – This low cost integrated trading and charting software system offers crystal clear charts in every format under the sun. You’ll also benefit from research tools and a handy trading simulator.
- Sierra Chart – This trading platform not only offers easy to set up charts, but you also get extensive technical analysis tools. It also offers a demo account, plus real-time and historical data.
- TradeStation – You benefit from flexibility and multi data charts. On top of that, you get access to indicators with alerts and a number of intelligent drawing tools.
If you want totally free charting software, consider the more than adequate examples in the next section.
The good news is a lot of day trading charts are free. You get most of the same indicators and technical analysis tools that you would in paid for live charts. You’ll also find some of the free options offer a space for traders to follow experienced traders, and discuss instruments and markets with each other.
These free chart sites are the ideal place for beginners to find their feet, offering you top tips on chart reading. Some will also offer demo accounts. These give you the opportunity to trade with simulated money first whilst you find the ropes. They’re ideal for trying a host of different charts until you find the right one to compliment your trading style.
Some of the most popular free online trading charts are:
- Technician – You’ll get real-time day charts for all US equity markets and forex. In addition, you’ll get delayed data from global stock exchanges and futures markets.
- TradingView – You’ll get real-time stock charts on 1, 3, 5, and 15-minute time frames. You can also get forex and bitcoin charts, whilst futures data is delayed. You’ll get access to hundreds of technical indicators and the ability to set up watch lists and alerts.
- FreeStockCharts –You get trading charts for crypto, futures, stocks and all the other big markets. You’ll get 1, 2, 3, 5, 10, and 15-minute time frames to choose between. You can save portfolios, create various chart layouts and benefit from a whole host of technical indicators and drawing tools.
This page has explained trading charts in detail. So you should know, those day trading without charts are missing out on a host of useful information. Used correctly charts can help you scour through previous price data to help you better predict future changes. There’s a host of charting software out there, including several free options. Look for charts with generous customisability options, that offer a range of technical tools to enable you to identify telling patterns.