How to Find Trading Price Charts - dummies

How to Find Trading Price Charts

By Michael Griffis, Lita Epstein

Price charts show the history of a stock’s price over time. These charts contain useful trading information that is revealed with careful analysis. There are two kinds of online charts: real-time charts and delayed-price charts. Although the charts may be identical, the prices shown in the charts are not.

Real-time charts display current price data updated within a few seconds of the trade. Delayed-price charts do not show the most current trades. Instead, the prices shown on the chart are at least 15 to 20 minutes old.

Internet charts with delayed prices

You can use delayed-price charts to identify support and resistance levels, display moving averages, find emerging trends, and select possible entry and exit points for tomorrow’s trading day.

Here are a few sources for online charts:

  • BigCharts: BigCharts is part of the CBS MarketWatch family. The site is free and offers an excellent charting package with plenty of options, including interactive charts, industry analysis, and stock screeners. You can define a list of favorite charts for quick review. News and market commentary are also provided.

  • Investor’s Business Daily: Investor’s Business Daily (IBD) publishes its proprietary ranking system online and in its daily paper. Using the stock-picking methodology developed by publisher William O’Neil, the site provides charts and rankings by relative strength and earnings growth. They’re available by subscription.

  • Decision Point: Decision Point is another subscription charting site, but it takes a different approach, providing chart books, hundreds of unique charts, and market commentary based primarily on technical analysis. If you’re looking for a quick way to scan a large group of stocks, this site provides excellent tools. You may find that Decision Point is a nice complement to a more traditional charting site or charting software package.

Internet charts with real-time prices

Although most online brokers provide support for real-time prices, not all provide real-time charting capabilities. If your broker doesn’t offer what you need and you find that delayed prices are just too frustrating, you can find a number of sites that offer real-time price charts. Real-time, browser-based Internet charts usually aren’t free. You will generally find them priced between $9.95 and $34.95 per month.

Sites offering real-time charts include the following:

  • StockCharts: StockCharts offers many excellent free charting tools, but the best parts are available by subscription. Advanced features include real-time, intraday pricing, the ability to create and store chart annotations, the ability to create large lists of your favorite charts, the ability to define custom chart settings, and the capability of creating custom scans based on technical indicators.

  • The free capabilities of the site are fairly limited, and you’ll have to put up with banner ads and the occasional full-page ad that display before the page you want appears. The free portion of this site uses data from electronic communications networks (ECNs), not data from the major stock exchanges.

    Unfortunately, ECNs don’t trade all stocks, so real-time charts and quotes may not always be available. And ECN prices may not always match prices on the major exchanges, but they’ll be very close. If you can put up with these limitations, the charts and price quotes are in real time. And they’re free.

Charting software

Before taking a step up toward a stand-alone charting application, make sure you explore the tools provided by your broker and other brokers and by websites offering Internet charts. Some of these online tools are powerful and may be more cost effective than a stand-alone package.

Stand-alone charting software, however, often provides capabilities beyond what you can find online. For example, charting software packages offer system testing but rarely are part of a website’s tool set.

Several packages are available; two examples include

  • MetaStock: MetaStock comes in two flavors, a standard end-of-day trading package and a professional version for real-time traders. Each offers a variety of analysis tools, technical indicators, system development and testing capabilities, and access to fundamental stock data.

  • TradeStation: TradeStation is the gold standard of charting software. It is powerful, flexible, and configurable, and it’s designed to work the same way institutional trading platforms do. You can fully automate your trading system by programming your strategies into the system and then having TradeStation execute them in real time. It also supports direct access to all ECNs and stock exchanges.

Many other charting packages are available, but these two packages are widely used and give you a good basis for comparing all the other available products.

The drawback to stand-alone charting software is the expense. In addition to the price of the software, you need a data provider to deliver end-of-day or intraday market prices. When selecting a charting software package, make sure it supports the data service you plan to use. They must work together.

Data service vendors include