What is a bar chart in trading?

A bar chart or bar graph that presents data with rectangular bars proportional to the values they represent. In trading and technical analysis, however, the bar chart definition is different. Often referred to as the OHLC (open, high, low, close) bar chart, it illustrates price movements of a financial instrument over time.

What is OHLC bar chart?

The bar length or height indicates the data quantity or magnitude. In trading, OHLC bar charts visualise price movements over time, assisting in the identification of trends and patterns crucial for trading decisions. Bar and candlestick charts, while similar, have different presentation styles.

Should you use a weekly bar chart?

A weekly bar chart, which shows a new bar for each week of price movement, may be appropriate for a long-term investor, but not so much for a day trader. Because a bar chart shows the open, high, low, and closing prices for each period, there is a lot of information that traders and investors can utilize.

Why do technical analysts use bar charts?

Technical analysts use bar charts—or other chart types such as candlestick or line charts—to monitor price action, which aids in trading decisions. Bar charts allow traders to analyze trends, spot potential trend reversals, and monitor volatility and price movements. Traders and investors decide which period they want to analyze.