Charts really are a trader's window to the markets. With the many advances in today's trading platforms, traders can view vast amounts of market information on their computers. With so much data available, it's essential to use well-designed charts that enhance, and not hinder, your view of the markets. As the data and tools you choose to incorporate in your charts ultimately have the best impact how you interpret the markets, the entire design of one's charts can enhance your situational awareness, response time and trading precision.
You might have all the right information to create smart trade decisions, but when you can't find and interpret that data quickly, it is useless; the ability will undoubtedly be lost. The faster you can interpret market data, the faster you can react to changing conditions and pounce on trading opportunities. Clear, easy-to-read charts are essential. In this section, we shall take a look at ways to create high performance charts.
Colors
Most charting platforms support literally a huge selection of color choices. When you is going to be spending plenty of time taking a look at your charts, both for research and actual trading, choosing colors that are easy to view is just a must. Individual colors on the chart must be carefully selected, and the combination of colors should create a graph that's adequate contrast and is visually pleasing.
In general, chart backgrounds are best kept to neutral colors; white, grey and black tend to work well. Bright or neon colors could become intolerable over even a short time frame and can make any chart indicators difficult to see. Once a pleasing, neutral background color is selected, you are able to experiment with colors for the remaining chart (things such as grid lines and text for time and price). These colors are best kept neutral as well and should contrast with the chart background so that most information is straightforward to see. A bright background with light grey grid, axis and price components, like, creates an easy-to-read chart.
The price bars and indicators should stand right out of the chart background; they're, all things considered, everything you are very watching. Price bars in red (for down bars) and green (for up bars) will appear well against some of the neutral background colors; and price bars in black (for down bars) and white (for up bars) stick out well against a gray background. Indicator colors should provide enough contrast to be easily seen and interpreted. These figure shows a typical example of a graph that's a neutral background and easy-to-view elements.
You might want to consider using one color scheme for the order entry chart (the chart you utilize to produce your trade entry and exit decisions) and a different mixture of colors for all your other active charts of the same symbol. In this way you'll always have the ability to quickly identify your order entry screen.
Layout
A "workspace" is comprised of all the charts and data that appear in your trading monitor. Having more than one monitor is enormously helpful in creating an easy-to-interpret workspace simply while there is more real estate. Some traders want to use one monitor for order entry and any remaining monitors for price charts and other analysis tools. It must be noted that a lot of information can become confusing, despite multiple monitors and well-designed charts. In order to avoid confusion and clutter, it's important to eliminate any extraneous indicators or market data from your own chart. It requires a little bit of trial and error to find the most readily useful tools for the market analysis, and eliminating unused and redundant indicators and data lets you give attention to the important elements.
Technical indicators may be placed on an amount chart either as an overlay or as a sub-chart. Overlays are drawn directly over the purchase price bars. Bollinger Bands® and moving averages are samples of overlays. Sub-charts appear directly below the purchase price chart. Types of indicators that typically appear in a sub-chart include stochastics, the Commodity Channel Index (CCI) and the Relative Strength Index (RSI). If you should be utilising the same indicator on multiple charts, it's advisable to help keep them in the same location, utilising the same colors, on each chart. This helps it be easier to locate and compare the particular indicator across various charts.
Numbers and Text
Using bold and crisp fonts makes it easier to see the numbers and text which are displayed on your charts. Generally, you are able to keep fonts small for information that you might need to reference once in a while, but that's not integral to your trading decision. For instance, the names of any analysis techniques which are mounted on a graph, such as technical indicators and strategies, typically appear as text at the top of the chart to which they're attached. When you probably don't need certainly to be able to view these records regularly, the font size can be relatively small therefore it doesn't take up extra space. The costs that appear on your chart's price axis, however, tend extremely important to your trading and must certanly be sized appropriately.
Once you've selected the font and size for the writing and numbers that appear on a graph, it is advisable to use the same selection on all your charts. This continuity can aid in creating easy-to-read and interpret charts.
Saving Your Charts
Once you've a graph setup that you will be satisfied with, you are able to save it so you don't have to reformat your charts and workspaces each time the analysis platform is opened (see your platform's Help section for directions on how to do this). It is also advisable to take a screenshot for backup purposes. You are able to do this either by using your platform's Save as Picture feature (or a similarly named function), or throughout your computer by pressing the Prt Scr (print screen) key to recapture the whole screen, or Alt + Prt Scr to copy only the active window. Then you're able to paste the screen capture into a report, e-mail message or other file. Since creating the charts and workspaces is really a time-consuming process, it is in your absolute best interest to truly have a quick approach to restoring any lost setups.
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