How to Read Charts

There are three main types of price representation. Each discards or preserves different information; choosing the right one is a decision about signal-to-noise, not aesthetics. 📈 LINE CHART: connects only closing prices. Simple and clean, ideal for seeing the general trend and filtering intraday noise. But it discards all the information about highs, lows and the intraday range — precisely the information that reveals volatility, rejection and institutional positioning. Useful for macro context, almost useless for execution. 📊 BAR CHART (OHLC): shows Open, High, Low and Close. A small notch on the left = open, on the right = close. Less visual but used by professionals because it preserves the complete range and exposes the wick structure that line charts hide. The standard in institutional research before candlesticks dominated the retail space. 🕯️ JAPANESE CANDLESTICKS: like bars but with a colored body between open and close. Green (or white) = close > open (bullish). Red (or black) = close < open (bearish). They've become the standard because they visually communicate four pieces of information (O/H/L/C) plus the directional bias in a single element the eye processes instantly. The body/wick ratio encodes conviction — the single most important qualitative read a chartist makes. A fourth, advanced representation worth knowing: • HEIKIN-ASHI: a 'smoothed' candle that uses average prices. Reduces noise and highlights the prevailing trend but lags and is not tradeable for precise entries because the displayed prices don't match actual market prices. • POINT & FIGURE / RENKO: filter out time and keep only meaningful moves — used by swing/position traders to ignore noise. The institutional point: the chart is not 'the market'. The market is the order book and the flow behind it. The chart is a delayed, aggregated visualization of that flow. Different chart types are different lenses on the same underlying reality; none of them is the reality itself. A trader who forgets this starts trading the chart instead of the market.