Do they offer valuable perspectives? Here are 10 types of price charts to satisfy your curiosity. They might turn your trading perspective upside down. For easy comparison, we are using the same two trading sessions as examples for each chart type. One chart shows a clear trend while the other will shows a trading range. Line Chart 2. Bar Chart 3. Candlestick Chart 4. Volume Chart 5. Tick Chart 6. Range Bar Chart 7. Renko Chart 9. Kagi Chart It means that each data point on the chart comes from a fixed time period.
For instance, if the time base is daily, each data point will represent price level s of each trading day. The charts below show the 5-minute time-frame. Study of price charts began before technology was able to send market tick data instantaneously.
Building charts with continuous price data was not possible. Hence, charts with a time base have become the standard in technical analysis.
However, these three chart types are not always plotted with a time base. You can also plot them with a tick or volume base as we will discuss in the second section. Mark out the closing price of each time period 2. However, line charts are cleaner than other chart types. These four pieces of data explains why some traders call them OHLC bar charts. Armed with a bar chart, we can study the relationship between the highs, lows, closes, and opens of different bars to derive a whole host of bar patterns.
Look at the examples. Bar patterns are nifty timing tools that offer us trade entries with controlled risk. They are similar, except for an enlarged region between the opening and closing price.
The range between the opening and closing price of each candlestick is the body of the candlestick, which is its defining feature. Candlestick Chart Trend Trading with a Candlestick Chart It is not surprising that candlestick charts have become the preferred choice for most traders. Other than being able to add various candlestick patterns to their arsenal, a candlestick chart does not dilute our ability to spot bar patterns.
A rare chance to get the best of both worlds. The relationship between the bodies of candlesticks is important to candlestick patterns. A slight drawback of candlestick chart is that candlesticks occupy more space than OHLC bars. In most charting platforms, the most you can display with a candlestick chart is less than what you can with a bar chart.
This poses a problem to time-based price charts. As time passes, regardless of the level of activity in the market, the chart continues to print new bars or candlesticks.
In such cases, time-based charts present an inflated impression of market activity. To address this issue, some traders use the level of market activity measured by volume or ticks instead of time as a basis to sample price data. There is an important caveat for activity based charts. This is due to filtering of the market data by your feed provider, and possible issues with your internet connection and computer performance.
However, whether these issues outweigh the potential benefits of using tick and volume charts depends on your trading style and evaluation. In particular, be careful if you intend to use volume or tick charts for spot forex trading.
Thus, the volume or tick data might not be representative of the entire market for the instrument you are trading. It is the most direct way to measure the amount of market activity.
Hence, on volume charts, each bar candlestick represents a fixed volume. For instance, a volume chart will display the OHLC of a volume block for each bar. You can plot volume charts in the style of a bar chart or candlestick chart. Not sure what setting to use for your volume chart? A simple starting point is to use the average volume of your usual trading time-frame.
For instance, we arrived at volume charts in the examples by measuring the long-term average volume of 5- minute ES bars. Hence, it tends to show smoother price waves that are conducive for trading. This is the main advantage of a volume chart. Generally, you can still rely on bar patterns and candlestick patterns in volume charts. However, using a volume chart has major implications on tradi- tional volume analysis. For instance, to find high volume breakouts, look for price thrusts with consecutive bars moving in the same direction.
Naturally, a basic volume overlay is useless. Instead, consider using a time overlay that shows the time taken to complete each volume bar. Volume Chart Range 2. Like the volume traded, the number of transactions also measures the level of market activity. However, the volume of each transaction differs. Hence, a tick chart does not replicate the volume chart.
When starting out, measure the average range of your usual trading time- frame. Then, adjust the tick setting to get a chart with similar volatility.
Fibonacci numbers like tick and tick are also popular choices for tick charts. Tick Chart Trend Trading with a Tick Chart As with volume charts, short-term price patterns are still effective with tick charts. The example above shows that tick charts work well in trending markets.
Do not take that as a sign that tick charts offer the Holy Grail. Many trading methods work like a charm in trending markets. While volume analysis is possible with tick charts, you will find less variation in the volume of each tick bar as both tick and volume are measures of market activity.
Simply Price Charts The next five price charts are simply price charts. They share a simple characteristic. They move only when price moves. If you are a price action purist, you will enjoy exploring the following chart types. However, out of the five chart types below, the range bar chart is the only one that is plotted without any regard to time. This is hardly surprising as traders developed them back in the days when continuous updating of prices charts cannot be done.
For the examples below, we used a 5-minute bar chart as the underlying time-based chart. Hence, only the range bar chart shows the exact price action. In a range bar chart, every bar will end once the range between its high and low equals the chosen range. Thus, every bar will have the same bar range. In addition, every bar will close either at its high or low. Range Chart Trend Trading with a Range Bar Chart Due to the forced break after a fixed bar range, many bar and candlestick patterns disappear from a range chart.
For instance, Harami patterns and inside bars will never show up on range bar chart. As every bar has the same range, you can easily pick up the bars that attract a high volume. These bars are potential support or resistance levels. Look at the example below. Range Chart Range 2. How do we know if a market has reversed? We need to decide on a reversal amount. The standard reversal amount is 3- box. This means that for a rising column to end and a falling column to start, the market must drop by 12 ticks 3 box times 4-tick box size.
Our examples are based on the closes of 5-minute bars. It means that we update the chart using the closing price of 5-minute bars.
While they are simple break-out patterns, you will need some practice before you can pick them out. Refer to the following books to learn more. To begin, we must choose a brick size.
The chart prints a new brick when the market moves more than the brick size away from the preceding brick. This means that a Renko chart does not display the exact price action. It filters away whipsaws that are smaller than the brick size.
Hence, we can use Renko charts for two purposes. Renko Chart Range 2. However, a Kagi chart does not need a box size. All it needs is the reversal amount that you can specify in absolute price range or percentage change.
Once price heads in the opposite direction by the specified reversal amount, the chart will change direction. A distinguishing feature of a Kagi chart is the different line width. When price breaks below a previous swing low waist , the line thins Yin line. Hence, it is unwise to rely on it in a sideways market in which most break-outs fail. Refer to example below. However, it is especially useful for tracking the market structure of swing highs and lows.
These lines are plotted according to the closing prices of the underlying time chart. In the first example, the underlying chart is the 5-minute chart.
A new line in the same direction is made when the underlying time- based chart closes beyond the preceding line in the same direction.
A new line in the opposing direction is made when the underlying time-based chart closes beyond the last three lines in the opposing direction. This is where it got its name from. While bar and candlestick patterns are not applicable, Three-Line Break charts offer a unique trading signal made up of three lines black shoes, suits, and necks. A white suit means buy, and a black suit means sell. Look at the chart below for examples. We had to change the underlying time base to 1-minute for the trading signals to surface.
It explains how to construct each chart type in detail together with practice examples. Make sure that you understand the consequences of fac- toring it into your market analysis. Remember that the bulk of technical analysis was, and still is, designed with time-based charts in mind. This means that their effectiveness might be undermined in alternative chart types. Of course, you might also find pleasant surprises as you try them out.
A sound way to start exploring a new price chart is to use it as a complement to your current chart type. In addition to getting a second opinion, you are able to compare their efficacy. Initially, it might even look like a promising candidate for the Holy Grail. However, eventually, you will realise that every chart type has its drawbacks.
Check the Implementation of Alternative Price Charts in Your Charting Platform While most charting platforms offer time-based charts, the avail- ability of other chart types differs among platforms.
Furthermore, the implementation of these alternative chart types might not be consistent, given their relative obscurity. Ensure that you understand how your charting platform builds the chart and are comfortable with the formula that goes behind the chart plot.
Have fun! It is the rising tide that lifts all. For day traders, the intraday trend makes the difference between a session of windfall profits and one of major losses.
By trading along with the intraday trend, we are following the path of least resistance to day trading profits. As the trend is the big picture, it seems removed from current price action. Hence, many traders are tempted to leave price action out of the trend equation.
They rely on a distant moving average to define the market trend and do not factor in price action. These traders are missing an important confirmation tool. Using indicators to identify the intraday trend is reasonable. How- ever, if we link them up with price action, we are able to enhance their prowess. Hence, in the first part of this two-part series, we will focus on using indicators with price action to track the intraday trend.
In the second part, we will discuss two other methods to find the intraday trend. Essentially, we are looking for a shallow pullback followed by a new high low to confirm a bull bear trend.
To confirm a bullish intraday trend, look out for the following conditions. The rationale for each condition is in brackets. Price touches the moving average. Establishes baseline. Use- ful for sessions that open with a gap.
Price stays above the moving average for at least one bar. Bullishness 3. Price retraces down towards the moving average without making any bar high below the moving average. Lack of bearish commitment 4. Bull trend confirmed when price rises above the last extreme high. Confirmation of bullish market structure To confirm a bearish intraday trend, look out for the following. Price stays below the moving average for at least one bar. Bearishness 3. Price retraces up towards the moving average without mak- ing any bar low above the moving average.
Lack of bullish strength 4. Bear trend confirmed when price falls below the last extreme low. Instead of guessing if the gap would start a new bull trend or close the gap, we waited for price to return to our benchmark SMA.
Price touched the SMA. This bar stayed below the SMA, confirming the bearish momentum, 4. This bar made a higher bar high but could not even rise to test the SMA. As the market fell past the last extreme low below the SMA, we confirmed a bear trend. Trading with just a period moving average is an excellent starting point for any trader. The resulting lines form a price channel to help us clarify the intraday trend.
Since the indicator in this case is more complex, the interpretation rules are simpler. When two price bars stay completely above the channel, we define a bull trend. Intraday Trend - Price Channel with Price Action The example above shows how the price channel helped to define a change of intraday trend.
Although the market has risen sharply since this session opened, according to this method, we could only define a bull trend at this point. These two bars changed the intraday trend to bearish. Other than using moving averages of bar highs and lows, you can also use Keltner Bands and Bollinger Bands. As these price channels are constructed differently, you will need to adapt the rules for defining the intraday trend.
By comparing them, we are able to understand both methods better. The SMA method focuses on finding lack of momentum on pullback to identify new trends. The price channel method finds powerful moves that lift the market beyond the price envelope to start new trends. How do these two methods compare with the next two pure price action methods?
Read the next chapter to find out. We also looked at two ways to define the intraday trend by combining simple indicators with price action.
Now, in this second and final part, we will look at the next two methods to decipher the intraday trend. These techniques focus on only price action. It is a higher level perspective of the market.
Hence, one popular method to determine the intraday trend is to look at the price action of a higher time-frame. This hourly bar made a lower low and confirmed a bearish intraday trend. This bar made a higher bar high and turned the intraday trend bullish. It is a classic example of using a higher time-frame for intraday trading. It uses the hourly chart to assess the intraday trend before trading in the five-minute time-frame.
In his solid system, he recommends a factor of five when considering higher-frames. An example would include the 1- minute, 5-minute, and minute time-frames. It is useful for both intraday and longer term analysis. By linking up swing pivots, we get trend lines of varying slopes and importance.
Trend lines highlight the market structure of swings and project their momentum and speed. The basic interpretation of a trend line is that the trend reverses after it is broken. The example below shows how a broken bear trend line hinted at the later bull trend. Intraday Trend - Trend Lines This method is simpler in the sense that it does not use any indicators and focuses on one time-frame.
However, to make it work, you will need to master the skill of drawing trend lines. There will always be cases when we confirm a trend only when it starts reversing. Such instances are unavoidable. This is why we have trading setups to pinpoint entries and limit our risk. Each of the four methods above has its specific drawbacks. For the two methods that rely partly on indicators discussed in part one , we need to decide on the look-back period of the indicators.
While the chi-square test is useful for determining whether there is a relationship, it doesn't tell the strength of the relationship.
Symmetric measures attempt to quantify this as shown in the Table 3. This means that the knowledge and practice of penetration pricing strategy are strongly related to the period of service of the employees and that the company really uses the strategy and at the same time, the customers also like it and hence help boost the performance more significantly.
Table 4 Relationship between Penetration Pricing Strategy and Performance Practice penetration Companies that want to grow should pricing practice penetration pricing Practice penetration pricing Pearson Correlation 1.
The significant value of. This suggests that the company should focus more on bundle pricing strategy because there is significant effect of the penetration pricing strategy on the number of customers, customer loyalty and quality of food and services. This implies that the company should continue introducing new foods at reasonable prices to attract more customers and to retain the existing ones since the customers like unique and improved products at reasonable prices.
The correlation reported was positive and using the Pearson correlation r value , then the correlation is statistically significant which suggests that the company should focus more on bundle pricing strategy because there is significant effect of the penetration pricing strategy on the number of customers, customer loyalty and quality of food and services.
Recommendations On the basis of this study, the following recommendations are made: From the study, it is evident enough that the knowledge that the employees have concerning a pricing strategy, the more it is practiced and the more returns it brings to the company.
Penetration pricing strategy has strong positive correlation with the performance and as such, the researcher recommends that every business should seek to employ this particular strategy. This is due to the fact that most customers like lowly priced commodities and even discount as they make the purchase, this encourages them and tend to be regular customers to the said enterprise. However much this strategy is emphasizing on the pricing being set low, the quality of goods and services are not supposed to be compromised.
With this most of the customers will be retained and more will be attracted not forgetting that the business will extend its parameters as far as the market share in the region is concerned. Andreas, H. Customer value-based pricing strategies: why companies resist. Journal of Business Strategy, 29 4 : 41 — Arie, H. Anna, C. The relationship between customer value and pricing strategies: an empirical test. Berney, R. Production, information costs, and economic organization. American Economic Review, Chalita, S.
Pricing strategies and innovations in the Thai mobile communications market. David, J. Marketing-orientated pricing: Understanding and applying factors that discriminate between successful high and low price strategies. Diamantopoulos, D. Pricing: theory and evidence — a literature review. Donald, N. The Applied Theory of Price, Macmillan, Gary, B. Gottfried, G. Pricing Strategies in online and Offline Retailing. Institute of Management; journal of marketing, Government of Kenya.
Economic Survey Central Bureau of Statistics.. Haberberg, A. Strategic Management Theory and Application. Oxford University Press.
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International Journal of Productivity and Performance Management, 61 1 : 46 — Myers, M. Antecedents and actions of export pricing strategy: a conceptual framework and research propositions. Noble, P. Industrial pricing. Theory and managerial practice. Marketing science 18 3 : — Oliver, W. Pricing in Network Effect Markets. Goethe university mertonstr Germany.
Paul, T. Relating price strategies and price-setting practices. Priceless is both actionable and entertaining. This book aims to solve this. The Psychology of Price tells you, step by step, how to use the psychology of price in your business. No matter what you sell, whether a product or a service, to consumers, to other businesses, or to government.
This company uses pricing strategies to create a whole new product category, achieve a premium position for it in several markets, and make big profits by understanding the psychology of its customers. In his book he leads us through stories and first hand experiences throughout his extensive career to maximize value to both the customer and the business. Our life is a constant string of decisions whether something is worth our money or our time, as a business we also try to convince other people to part with their money or their time.
Price is the place where value and money meet. Price is the most powerful and pervasive economic force in our day-to-day lives and one of the least understood.
This perceived complexity of pricing leads many managers to set prices based on rules of thumb and hunches, often leading to setting price that disappoint both your customers and you bottom line. He helped countless managers and executives use pricing as a way to create new markets, grow their businesses and gain a sustained competitive advantage. He also learned some tough personal lessons about value, how people perceive it, and how people profit from it. Contextual Pricing describes how buyers are influenced by comparison points and contextual messages more than by actual price levels.
Identical products can sell at radically different prices to the same target audience. This book is full of market tested case studies that will help you understand how your customer makes contextual pricing decisions. Contextual pricing can help you create a better pricing strategy and easily implement using simple tactics and pricing tools such as bundling, upselling, hooks, and so much more.
It can also help you avoid common pricing mistakes when raising or lowering prices and discover how you can win the competition through superior strategy, not through lower margins.
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