There are three basic charting systems available for day traders. Now, there is no specific rule that says all day traders have to follow one of these examples. But, they are the most common and widely used charting systems in the country. They are the time-based chart, the volume based charts, or the volatility based charts. The third chart type is, by far, the least common, but it has hidden secrets. Investors can look at the YouTube account for Markus Heitkoetter to learn more about the value of volatility charts.
How are time charts normally organized?
Though there are three types of charts, with two of them being dominant, it is still time charts that make up the overwhelming majority of strategies. Time charts will be the chart types that dominate discussions. The most obvious reason is that they make logistical sense.
Users set up the chart by time differentials, also known as intervals. A common differential is 15 minutes. But, some may find this too long. Some investors will use one-minute intervals while some will use four-hour intervals depending on the type of investing they are interested in.
What interval works best?
Averages may not always work in investing. The average is mediocre. The average is right in the center, surrounded by everyone else. Investors need to be special and this is accomplished by going outside the norm.
A common interval is 15 minutes. The one-minute charts are a little too specific to be relevant in longer-term investing, and it could make for an unwarranted and needless mess. 30 minutes might be too long. But, for day traders who typically want to hold for the day and at the end of the close, the 30-minute intervals will often work just fine. Of course, 30-minutes could sprawl the numbers too thin.
Charting usually includes a little gut instinct thinking. It is probably one of the only areas of investing that relies a little on the gut. Choosing how to spread the data largely comes down to preference. Is the more specific information in a one-minute interval relevant and useful? If so, keep it. If not, it could be unnecessary specific.