Charts and chart creation


We can create charts in the GRAPHS section, or in MY DIRECTORIES, which is a subsection of MY FINECHARTS. The form for entering the chart parameters, and for technical analysis, is made of two sections and a toolbar.





General settings

The general settings section contains the following boxes:

  • The  symbol  box may contain

    • A symbol, e.g. AAPL

    • A pair of symbols separated by a colon, e.g. if you enter AAPL:MSFT a ratio chart will appear

    • A pair of symbols separated by a minus, e.g. if you enter AAPL- MSFTa differential chart will appear

    • A pair of symbols separated with a plus, e.g. if you enter AAPL+MSFT a cumulative sum chart will appear

    • We can also enter various virtual symbols into the symbol box, such as market breadth indicators , COT reports, or information about operations of the U.S. central bank FED, or the prices of Czech mutual funds.

  • The period box is used to adjust the data series, which is used to calculate, and ranges from minutes to months.



Figure: Selection of symbols: In the background there is a figure with the chosen symbol $CURRIDX.ADV, which is the number of growing symbols in the given group of currency pairs (the basis for several market breadth indicators; a market breadth indicator itself). Symbols are divided according to the market they belong to.



  • The range box defines the way in which we enter the time frames of charts. You can chose from a number of options. If you chose LAST N PERIODS then the chart will be automatically filled in; a new period will be added on the right, and one period will decrease on the left. If you chose DATE FROM - TILL, then the chart will be static, new current periods will not be automatically filled in.


Creating your own charts

For users, creating their own charts is the possibility to create bases for their own analysis. Our graphics editor is the best of what this name indicates. It enables every possible standard function that similar editors have, and has a number of new functions that other editors do not offer:

  1. Inserting various charts into one window.

  2. More than one time frame in one chart -  prices and indicators, 15-minute, hourly, daily, etc., can be combined. This function gives a completely different view of the markets; it makes everything easier, and impossible for a user forget a certain time frame, and thus trade against the prevailing trend.

  3. The combination of stock prices, stock indices, currencies, mutual fund prices, COT reports, and market breadth indicators in one chart - this only a theoretical possibility, but you might want to compare the price development of your favorite mutual fund with the stock index. Here you can.

  4. COT reports analysis - our graphics editor enables you to compare the price of a certain stock index, bond, or commodity with an important sentiment indicator - the positions of traders in futures markets contained in the COT reports.

  5. Prices can be entered as portions of two symbols, and we can thus compare the efficiency of, for example, the price of silver with the price of gold. This is an important tool in deciding whether it is better to invest in gold or silver, or in bonds or stocks.

  6. Prices can be entered as inverse prices. Sometimes an opposite view of the price, including the respective calculated indicators, allows a better evaluation of the market development.

  7. The indicator can be made from a different asset than the one we have in the main chart - all you have to do is write a different symbol in price box directly in the editor for chosing an indicator.

  8. The possibility to use unusual time frames - 180 and 240-minute, 3-day, and 2-week.

  9. Using the division of volume into positive and negative in volume indicators. Positive volume is the volume that is associated with price growth. In this sense, it is the volume for the trade made for the price requested by the seller; for the ASK price. In some cases, where we don’t have “tick” data, we used the minute volume associated with the price growth. Negative volume is the volume associated with price drops. In our case it is the volume associated with trades that were made for the BID price, or for minute data, associated with the price drop. This division makes the most sense with 180-minute and longer charts, especially daily charts. It is not of much significance for shorter charts. The positive volume therefore eliminates the instants where the total volume would only confuse the user. For example, when after a long price growth the volume didn’t drop the whole day, and the price is still slightly growing. However, with intraday prices irreversible symptoms of distribution appear - strong, unexpected price drops, after which the price is kicked up again. Only a decrease in volume during price growth is considered a bad sign; unexpected intraday price drops are not, because they cannot display themselves with daily prices - it we don’t divide the volume into positive and negative. This division causes the positive volume to drop significantly during a strong intraday price drop; this is a negative signal.

  10. The option to enter the price as the sum or difference. This is mainly useful for volume symbols, such as COT reports, or data from the U.S. Central Bank (POMO operations, etc).

       

These functions make our editor one of the best editors available. Let us start to explain the functionality, from the basic functions. In short: In the graphics editor you can create a price chart of certain stocks, commodities, an index, a mutual fund or currency, and to the price you can add the following indicators -  price, volume, market breadth, or indicators created from COT reports; you can use all the possible time frames from minute prices to monthly prices. You can comment on your chart, insert trend lines and other elements into the chart, save it in your directories, and then publish the whole directory with the charts to let the other users see your view of the market development.

Figure: Here is a view of the environment of our graphics editor. In the upper part you can insert a symbol, the chosen time period (whether the value will be calculated in a month, week, day, hour, minute, etc.), the range of the chart (definition of the timeline), then there are the buttons BACK and UPDATE. The latter updates the chart according to the last setting. The second lower bar above the chart contains functions for working with templates (patterns of graphical solution of the chart), functions for storing and annotation for adding secondary graphic windows above the chart, or under it. Functions below the chart are related to the preferences for solving the chart type, its size, the internal layout, and a number of other functions - see later.




Chart features

  • In light of the type of the chart we can chose from a number of options. The basic choice for stock chart is the candlestick chart. However, a line, surface, or hidden chart can also be chosen. The hidden price makes sense if you would like to calculate the indicators from the stock index, but placed the price in another chart, whereas in the main chart you would have more than one indicator in a number of time frames, or symbols for COT reports, for better readability

  • Chart size - it depends on the personal selection of the user. For publishing chart we recommend the size 850 x 450 pixels. Many users use smaller monitors.

  • Extra blank space - enables you to chose the size of the space in the chart on the right of the last price point. This is useful when creating annotations - placing notes and various graphic elements directly into the chart, and future projection.

  • Logarithmic scale - this is an alternative to the classic arithmetic scale. While the arithmetic scale shows the own price, the logarithmic scale shows the logarithm of the price. The result is that in arithmetic scales the price symbols 100-200 and 200-300 have the same distance between eachother, however in a logarithmic scale these values will have a different distance between eachother, and price symbols corresponding with the same percentage distance, for example 50-100 (100% increase) and 500-1000 (also 100% increase), will have the same distance between each other. The logarithmic scale is useful mainly with long-term charts.

  • Inverse scale, grid, and chart coloring - will be described later

  • Points - if you check this option, the joint line chart with change into a system of connected points, where each period is marked with a point.

  • Price symbol - the most significant price peaks and bottoms will be dimensioned with this option.       

 


     
Figure: Other functions of the graphics editor - here we can digestedly see the options that the user has when entering the chart properties.        


Figure: Functions of the graphics editor:

  • Chart coloring  - by checking this option we get a colorful chart (default); without this function the chart is black and white.

  • GRID function - if you check this function a grid structure will appear in the background - like the one in the first explanatory chart of the functionality of the graphics editor.





  • INVERSE CHART function

In some cases you may want to turn the chart upside down, so to speak. Sometimes it is good to look at the indicators in an opposite state, so we don’t come under the impression that the stock price will continue to develop in the same direction. The INVERSE CHART function turns the price over according to the function “Inverse price”= 1/Price. When using this function the volume turns over as well, so we can calculate all indicators used for normal price and volume.


Figure: Inverse price AAPL - compare this chart with the previous chart.



  • One time axis function  - If we are creating a secondary chart with a certain indicator together with the main price chart, we can chose an appearance with its own time scale for this chart. This is also the default setting. Therefore, every subchart has its own time axe. However, sometimes for reasons of readability or saving space (e.g. when placing charts into a text - articles, etc.) it is better to only use one axe - we can chose this option by checking the box under the main chart, titled ONE AXIS.


Figure:  Default setting - there is one time scale under each chart



Figure: There is only one time scale, the box ONE SCALE is checked. 




Creating charts from templates, and saving them in the users directory

We can do many things with the charts. We can save them, retrieve them, use them as templates, or annotate them. 

  • TEMPLATE function
    There are three functions for working with templates.. 

    • SAVE SETTING AS TEMPLATE - this function enables us to create a certain chart appearance with specific indicators, moving averages, time frames, etc., and save this format for later use. We can adjust the appearance of the chart at any time using this function.

    • RETRieVE FROM TEMPLATE -  enables the use of ready templates. We chose one template, which we use to edit the current chart. We can delete individual templates if we no longer need them.

    • APPLY (APPLY SETTINGS TO CHARTS IN DIRECTORY) - we can use the current format of the chart in the graphics editor as templates for all charts located in the directory that we chose.

Figure: When using the function TEMPLATE - RETRIEVE a window appears, containing all of your saved templates. The user can chose the name of the template. An x in the right section enables you to delete a selected template.



Figure: When using the function TEMPLATE - RETRIEVE a window appears, containing all of your saved templates. The user can chose the name of the template. An x in the right section enables you to delete a selected template.




  • Function RETRIEVE CHART FROM DIRECTORY

    When working with the graphics editor we don’t always have to create a completely new chart; we can chose an older existing chart saved in any of our directories, and retreive it into the editor to work with it as with a new chart.

Figure:




Figure: The result of using the function RETRIEVE FROM DIRECTORY - the retrieved chart. In the figure there in a link to the button APPLY. With this function we can change all the charts in the selected directory to the format given by the current chart located in the graphics editor.





  • Function APPLY  - In the previous figure an arrow is pointing to the button APPLY. If we click on this button we will be offered the option of setting the format of all charts in a certain directory according to the format of the current chart located in the editor.


Figure: After clicking on the button APPLY an interactive window appeared, with the option to chose which aspects of the chart should be applied to the chosen directory. We can either change only the general settings, chart properties, overlays inside the chart (e.g. lines of moving averages), and indicators, or we can leave the default setting and change everything. The change will take effect after clicking OK.



  • Function RETRIEVE  - this function enables you to chose a certain stock from any directory, and retrieve it into the graphics editor window. You can then continue working with the chart as needed. The resulting work can then be saved again.

  • Function ANNOTATE  - this function enables you to insert various labels and graphic symbols manually created by the user, directly into the chart - such as trend lines, Fibonacci levels, markings of Elliott waves, etc. The function is very extensive, so it is described in a separate chapter here.




How to insert an indicator into a chart

You can insert indicators into any window - even into the main window that contains the price chart. You can also insert the price into secondary windows, insert a number of prices into the main window, insert a number of indicators into a secondary window, or use a number of time frames in one chart.

Figure: We can insert indicators, or so-called overlays (moving averages, etc) into the chart using the button located in the right upper corner in every chart.




After clicking on the button, another menu pops up - see next figure.

Figure: Overlays selection - we can chose from a variety of moving averages calculated from the closing price:

  • SMA = arithmetic (simple) moving average

  • EMA = exponential moving average

  • DEMA= double exponential moving average                                                                                                Calculation:  DEMA= 2* EMA(Close, Nper)- EMA(EMA(Close, Nper),Nper)

  • TEMA = triple exponential moving average , calculation: TEMA = 3*EMA(Close,Nper)- 3*EMA(EMA(Close,Nper),Nper)+3*EMA(EMA(EMA(Close, Nper),Nper),Nper)

  • WMA = weighted moving average 

  • KAMA = moving average developed by Perry Kaufmann, it adapts the calculation to the volatility

  • SAR = Parabolic SAR , an indicator developed by Welles Wilder

  • BBANDS % Bollinger Bands 

  • LINREG = linear regression calculated from the closing price

  • CLOSEPRICE = closing price - with this function we can insert other prices of different symbols into the chart. 

  • AVGPRICE

  • MIDPRICE

  • MIN = minimum price

  • MAX = maximum price

The window PARAMETER enables setting of the calculation length - how many periods the indicator will be calculated from.



Figure: Besides the type of indicator, we have to chose the calculation period. The advantage of our editor is that you can combine a number of calculation periods. Therefore, we can for example insert moving averages calculated for 200 15-minute periods, 200 hours, and 200 days, into the chart.



Figure: Selection of indicators. On Finecharts the indicators are divided into a number of groups. The main, largest group is made of classic indicators divided into the subgroups: TREND, MOMENTUM, VOLUME, PRICE, and OTHER. The second group is made of indicators in the subgroup FINECHARTS INDICATORS; these are indicators developed by Petr Fiala, and used in his analysis. Another group - FINECHARTS INDICATORS - MBI contains market breadth indicators developed by Petr Fiala. The description of these indicators can be found in the EDUCATION section. The last group is made of indicators intended for processing COT reports. Their description can be found in the section EDUCATION - COT reports. The indicator called COMP is basically made of two smoothed stochastic composite oscillators (made of two or four stochastic oscillators - their sum); it can also be used for stock prices. You just have to experiment a little bit, and try it out.



We can also insert an indicator calculated from an indicator in the chart. We can insert it using the window FUNCTIONS OF INDICATOR - see next figure.

Figure: Function of indicator - in this case we would insert the Rate of Change indicator calculated for forty days, and next to it a linear regression calculated from the Rate of Change price for 40 periods.




Figure: Functions of indicator - result - the indicators in the chart have their own y-axis, which is hidden. However, it can be inserted into a separate window, or above or under the main chart.



If we want to insert the price of another stock, index, or any other financial instrument into the chart, then we can use the function INSERT INDICATOR, namely CLOSEPRICE. We can chose another symbol to insert from the list of symbols, or directly insert it into the respective window. In this case we wanted to compare the price development of the ETF SPY (SP500) with the futures contract for U.S. Dollar Index (next figure).

Figure: Inserting a second price into the chart.




Figure: Here is the result of inserting the price of a second financial instrument into the main chart.




Creating a ratio price chart

For comparing the efficiency of two financial instruments we use the ratio of both prices. Ratios of some prices are also a good sentiment indicator (e.g. NDX100 to SPX500, or GOLD to XAU, etc).

However, the figure shows not only these buttons, but also other options of the editor, like the possibility to enter the price into the main window, as a ratio of two prices - in this case it was the ratio GDX:SPY. All indicators and calculations are then performed from this ratio.

Figure: Ratio of two prices 



In addition to the ratio price chart, we can also create differential charts or cumulative sum charts. A cumulative sum chart is useful mainly when working with COT reports or market breadth indicators.

Figure:The sum of the number of currencies growing in the given period, and the number of currencies located in the area of their price maximums. These are indicators entering some market breadth indicators, however, both indicators are market breadth indicators in themselves. The currency pair EURUSD is located in the upper part of the chart. These indicators are created from currency pairs such as AUDUSD, AUDJPY, EURUSD, EURJPY - pairs that tend to grow, like stocks do, during positive periods of capital markets, especially stock markets. This figure is a little bit confusing. However, if we only leave the linear regression for 63 days created from the cumulative curve in the chart, the figure changes a lot, and it can serve as an indicator of trend direction, e.g. for the currency pair EURUSD - see next figure.



Figure: Same figure as the previous one, but the main calculation indicator ADV+HHV (advances + new max) is hidden.


We could also use the calculation functions for COP reports - for example, add up the Net Short Commercials for gold and silver.




Poslední aktualizace: 14.6.2011