For any trader who follows the school of technical analysis, the chart is an indispensable tool. In the commodity derivatives market, too, there are 3 main types of charts that traders often use. These are line chart, bar chart and candlestick chart.

Investors rely on the analysis of these chart types to decide when to buy and when to sell.

Line chart (Line chart)

Line charts are simply the lines connecting one closing price to the next in a specified time frame.

Ảnh: Ví dụ Biểu đồ đường (Line chart)

Line charts are the simplest type of chart, giving traders an overview of market trends. If you want to see the market quickly in an instant, the line chart will be very helpful in this.

Cons: Line charts do not show price movements over a period of time. For example, with a 1-hour frame line chart, you will only know the closing price after that 1 hour and not know how the price has moved up/down in that 1 hour.

Bar chart

A bar chart is more complicated because it shows the prices of a commodity over a given time frame.

• Opening price
• Closing price
• Highest price
• Lowest price

Depending on the trading period, 1 bar will represent the price movement during that period.

Here is an example of a price bar:

Photo: Example of price bar (collectible source)

The entire bar represents the entire trading range of a commodity over a specified time frame.

The bottom part of the bar shows the lowest price when trading in that timeframe (Low)

The top of the bar represents the highest price when trading in that timeframe (Hight)

The horizontal bar to the left of the bar is the opening price (Open) and the right side is the  close price (Close).

Cons: Although it shows the price movement in detail, it is difficult to see whether the price is rising or falling within the time frame

Bar charts are also called OHLC (“Open High Low Close”) charts, because they also show High, Low, Open and Close levels.

Photo: Example of a bar chart

Candlesticks Chart

Like the bar chart, the candlestick chart still shows the price movement over a certain time frame.

Structure of a Japanese candlestick:

Photo: The structure of a Japanese candle

The Japanese candlestick chart overcomes the disadvantages of the bar chart by showing the opening and closing prices:

• Price Bar: The strikethrough to the left of the bar’s opening price and the right-hand side of the bar’s closing price.
• Japanese Candlestick: The opening and closing prices are determined based on the candle color. The candlestick rises when the body is white or green, then the price below is the opening price and the price above is the closing price. Conversely, when the body of the candle is black or red, indicating a decrease in price, the price above will be the opening price, and below is the closing price.

Traditionally, a white body is a bullish candle, and a black body is a bearish candle. However, most traders choose green for bullish candles and red for bearish candles to easily identify price movements

Photo: Example of a Japanese candlestick chart