When you trade, do you rely on the 5-minute chart? Or perhaps the daily chart? But why limit yourself to time-based charts alone?
Are there other ways to visualize price data? Do they offer valuable perspectives?
Here are 10 types of price charts to expand your analytical toolkit.
(Be cautious: they might fundamentally change your trading perspective.)
For easy comparison, we use the same two trading sessions as examples for each chart type. One chart shows a clear trend, while the other shows a trading range.
Time-Based Price Charts
These three common chart types are typically plotted using a fixed time base. This means each data point on the chart comes from a fixed time period. For example, if the time base is daily, each data point represents the price levels for each trading day. The charts below show a 5-minute time period.
The study of price charts began before technology could transmit market data (ticks) instantly. Creating charts with continuous price data wasn't possible. Therefore, time-based charts became the standard in technical analysis.
However, these three chart types aren't always plotted with a time base. You can also plot them using a tick or volume base, as we'll see in the second section.
Line Charts
Constructing a Line Chart
Building a line chart is extremely straightforward:
- Mark the closing price of each time period
- Connect them with a line
Trading With a Line Chart
A line chart doesn't offer much detail since it only includes the closing price of each period.
However, line charts are cleaner than other chart types. This makes them excellent for:
- Observing long-term trends
- Identifying chart patterns like Head and Shoulders and Triangles
Bar Charts (OHLC Charts)
Constructing a Bar Chart
To create a bar chart, we need the following price data from each time period:
- Opening price
- Highest price
- Lowest price
- Closing price
With this information, we can construct a price bar for each time period. These four data points explain why some traders call them OHLC bar charts.
Trading With a Bar Chart
A bar chart contains important details essential for timing our trades.
Armed with a bar chart, we can study the relationship between the highs, lows, closes, and opens of different bars to derive numerous bar patterns.
Look at the examples. Bar patterns are ingenious timing tools that offer trade entries with controlled risk.
Japanese Candlestick Charts
Constructing a Candlestick Chart
A candlestick contains the same price data as a price bar. They're similar, except for an expanded region between the opening and closing prices. The range between the opening and closing price of each candle is the candle's body, which is its defining feature.
Trading With a Candlestick Chart
It's not surprising that candlestick charts have become the preferred choice for most traders. Besides adding various candlestick patterns to your arsenal, a candlestick chart doesn't dilute your ability to detect bar patterns—a rare opportunity to get the best of both worlds.
The relationship between candle bodies is important for candlestick patterns. Candlestick charts make it easier to detect gaps between bodies (a candle with a body that doesn't overlap with the previous candle's body is a "star").
A minor drawback of candlestick charts is that candles occupy more space than OHLC bars. On most charting platforms, the maximum historical data you can display with a candlestick chart is less than what you can with a bar chart.
Activity-Based Price Charts
Time can pass without market activity. This poses a problem for time-based price charts. As time passes, regardless of the activity level in the market, the chart continues printing new bars or candles. In such cases, time-based charts present an inflated impression of market activity.
To address this problem, some traders use market activity level (measured by range, volume, or ticks) instead of time as the basis for sampling price data.
There's an important caveat for activity-based charts: you cannot get tick or volume charts from different data sources to match completely. This occurs due to market data filtering by your feed provider and potential issues with your internet connection and computer performance. Whether these issues outweigh the potential benefits of using tick and volume charts depends on your trading style and assessment.
Particularly be careful if you intend to use volume or tick charts for spot forex trading. Since there's no centralized market for spot forex trading, volume or tick data is limited to your liquidity pool, which in some cases is restricted only to clients of your forex broker. Therefore, volume or tick data might not be representative of the entire market for the instrument you're trading.
Volume Charts
Constructing a Volume Chart
Volume is the number of contracts or shares traded—the most direct way to measure market activity quantity.
Instead of using OHLC data from fixed time periods, we take the OHLC data from a volume block. Therefore, in volume charts, each bar (candle) represents a fixed volume. For example, a 233-volume chart will show the OHLC of a 233-volume block for each bar.
You can plot volume charts in either bar chart or candlestick style.
Unsure what setting to use for your volume chart? A simple starting point is using the average volume of your usual trading timeframe. For example, we arrived at 28,000-volume charts in our examples by measuring the long-term average volume of 5-minute ES (Mini-SP500) bars.
Trading With a Volume Chart
Since a volume chart slows down when market activity is low, it shows less sideways movement. Therefore, it tends to display smoother price waves that favor trading—the main advantage of a volume chart.
In general, you can still rely on bar patterns and candlestick patterns on volume charts.
However, using a volume chart has important implications for traditional volume analysis. A trader using volume charts can no longer:
- Look for volume patterns that support chart patterns
- Use volume to confirm whether a breakout is valid
- Use volume-based indicators
- Employ volume spread analysis
Nevertheless, if you understand the underlying concepts of the above techniques, you can adapt them for volume chart trading. For example, to find high-volume breakouts, look for price advances with consecutive bars moving in the same direction. Since each bar represents a fixed volume, consecutive bars represent a high-volume swing.
Naturally, a basic volume overlay becomes useless. Instead, consider using a time overlay that shows the time needed to complete each volume bar.
Tick Charts
Constructing a Tick Chart
In this context, a tick refers to a transaction. Like traded volume, the number of transactions also measures market activity level (not to be confused with NYSE $TICK).
However, the volume of each transaction differs. Therefore, a tick chart doesn't replicate the volume chart.
Each bar/candle in a tick chart represents the OHLC of a certain number of ticks.
Tick setting depends on market volatility. When starting, measure the average range of your usual trading timeframe. Then, adjust the tick setting to get a chart with similar volatility. Fibonacci numbers like 144 ticks and 233 ticks are also popular choices for tick charts.
Trading With a Tick Chart
As with volume charts, short-term price patterns remain effective with tick charts. The example above shows that tick charts work well in trending markets. Don't take this as a signal that tick charts offer the holy grail—many trading methods work perfectly in trending markets.
While volume analysis is possible with tick charts, you'll find less variation in the volume of each tick bar, since both tick and volume are measures of market activity.
Pure Price Action Charts
The following five price charts are simply price charts. They share a simple characteristic: they move only when price moves. If you're a price action purist, you'll enjoy exploring these chart types.
However, of the five chart types below, the range bar chart is the only one plotted without considering time.
The other four chart types (Point & Figure, Renko, Kagi, Three-Line Break) are created using a time-based chart that determines the chart's update frequency. This isn't surprising since traders developed them when continuous price chart updates weren't possible. For the examples below, we use a 5-minute bar chart as the underlying time-based chart.
Therefore, only the range bar chart shows exact price action. The other four price charts filter "noise" using different techniques and don't show exact market prices.
Range Bar Charts
Constructing a Range Bar Chart
First, specify a range. In a range bar chart, each bar will end once the range between its high and low equals the chosen range.
Therefore, each bar will have the same bar range. Additionally, each bar will close at either its high or low.
Trading With a Range Bar Chart
Due to the forced breakout after a fixed bar range, many bar and candle patterns disappear from a range chart. For example, Harami patterns and inside bars never appear on range bar charts. Of course, patterns like ID/NR4 and NR7 also become nonexistent.
You'll still find some patterns on range charts, with the most notable including:
- Doji
- Marubozu
- Pin Bar
- Engulfing Pattern
Combining a range chart with volume analysis is an interesting approach. Since all bars have the same range, you can easily identify bars that attract high volume. These bars represent potential support or resistance levels, as shown in the example below.
👉 Explore advanced charting techniques
Point and Figure Charts (P&F)
Constructing a Point and Figure Chart
The first input for a P&F chart is the box size. For our example, let's use 4 ticks.
- When the market rises, we draw an ascending column of "X"s—each "X" represents 4 ticks
- When the market falls, we draw a descending column of "O"s—each "O" represents 4 ticks
- Whenever the market reverses, we draw a new column (you'll never see "X" and "O" in the same column)
How do we know if a market has reversed? This question leads us to the second input of a P&F chart: we need to decide a reversal amount. The standard reversal amount is 3 boxes, meaning that for an ascending column to end and a descending column to begin, the market must fall 12 ticks (3 boxes × 4 ticks).
Our examples are based on 5-minute bar closes, meaning we update the chart using the closing price of 5-minute bars (using the high/low prices of each bar is also an option).
Trading With a Point and Figure Chart
While our examples show intraday charts for easy comparison with other chart types, P&F charts are most frequently used on daily and higher timeframes.
There are specific chart patterns for point and figure charts. While they're simple breakout patterns, you'll need some practice before recognizing them. The good news is that P&F chart patterns have clearer definitions than their bar chart counterparts. Additionally, P&F charts offer unique methods for projecting targets.
Renko Charts
Constructing a Renko Chart
"Renko" comes from the Japanese word for "brick." To begin, we must choose a brick size.
The chart prints a new block when the market moves away more than the block size from the previous block's price (as with P&F charts, we can focus only on closing prices or the high/low prices of the underlying time chart).
This means a Renko chart doesn't show exact price action—it filters out price swings smaller than the brick size.
Trading With a Renko Chart
A Renko chart leaves no room for bar/candle pattern analysis. However, it excels at highlighting trends since it ignores "noise" movements smaller than the brick size.
Therefore, we can use Renko charts for two purposes:
- Track trends on a higher timeframe with a large block size setting, then take trades aligned with the Renko chart's direction using a smaller timeframe
- Guide us to let our profits run as shown in the example above
Kagi Charts
Constructing a Kagi Chart
The closest Western cousin to the Japanese Kagi chart is the P&F chart mentioned earlier.
However, a Kagi chart doesn't need a box size. All it needs is the reversal amount, which you can specify in absolute price range or percentage change. Once the price moves in the opposite direction by the specified reversal amount, the chart will change direction.
A distinctive feature of a Kagi chart is the different line width. When the market rises higher than a previous swing high (shoulder), the line thickens (Yang line). When the price breaks below a previous swing low (waist), the line thins (Yin line).
Trading With a Kagi Chart
With Yin and Yang lines, a Kagi chart highlights the breakout of swing highs and lows. Therefore, it's not prudent to rely on it in a sideways market where most breakouts fail (see example below).
However, it's especially useful for tracking the market structure of swing highs and lows. Thus, a Kagi chart is effective for finding support/resistance and tracking market bias.
Three-Line Break Charts
Constructing a Three-Line Break Chart
A three-line break chart consists of "lines" 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 is created in the same direction when the underlying time-based chart closes beyond the previous line in the same direction.
A new line is created in the opposite direction when the underlying time-based chart closes beyond the last three lines in the opposite direction—hence the name.
Trading With a Three-Line Break Chart
Standard trendline and support/resistance analysis works well (or even better) on three-line break charts.
While bar and candle patterns aren't applicable, three-line break charts offer a unique trading signal composed 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 timeframe to 1 minute to make the signals visible).
Frequently Asked Questions
What is the most effective chart for day trading?
Most day traders use candlestick charts for their balance of detail and visual clarity. They provide open, high, low, and close information while making patterns easily recognizable. The optimal chart depends on your trading strategy and personal preference.
How do volume charts differ from time-based charts?
Volume charts create new bars based on trading volume rather than time. Each bar represents a fixed volume amount, which means bars form faster during high-volume periods and slower during low-volume periods. This helps filter out low-activity market periods.
Can I use multiple chart types simultaneously?
Yes, many successful traders use multiple chart types for confirmation. For example, you might use a Renko chart to identify the overall trend direction while using a tick chart for precise entry timing. This multi-timeframe approach can provide stronger trading signals.
Do these alternative charts work for all markets?
While most chart types work across different markets, some perform better in specific conditions. Range charts work well in forex markets, volume charts are excellent for equities, and tick charts are popular among futures traders. Always test any chart type in your specific market before committing capital.
How do I choose the right parameters for alternative charts?
Start with your trading timeframe's average characteristics. For range bars, use the average true range. For volume charts, use the average volume. For tick charts, use the average number of ticks in your preferred timeframe. Adjust based on market volatility and your trading style.
Are these alternative charts available on all trading platforms?
Most modern trading platforms offer basic alternative charts like Renko and Range Bars, but availability varies. More specialized charts like Kagi and Three-Line Break may require advanced platforms or custom programming. Always check your platform's documentation for supported chart types.
Moving Forward With New Price Chart Types
Using a new type of price chart has significant ramifications for your trading. Ensure you understand the consequences of incorporating it into your market analysis.
Remember that most technical analysis was, and still is, designed with time-based charts in mind. This means its effectiveness could be undermined in alternative chart types—though you might also find pleasant surprises when testing them.
A good way to begin exploring a new price chart is to use it as a complement to your current chart type. Besides getting a second opinion, you can compare their effectiveness.
Seeing new chart types is certainly interesting. Initially, they might even seem like promising candidates for the holy grail. However, you'll eventually realize that each chart type has its drawbacks.
Check Alternative Price Chart Implementation on Your Platform
While most charting platforms offer time-based charts, the availability of other chart types differs between platforms. Additionally, the implementation of these alternative chart types might not be consistent, given their relative obscurity.
For example, NinjaTrader's range bar charts have space between bars, while range bars in QuoteTracker do not.
Read your charting software's documentation. Ensure you understand how your platform creates the chart and whether you're comfortable with the formula behind the price plotting.