Emini Charts |
The Professional Trader's Digital Treasure Map
All Trading Charts have evolved greatly since the dawn of the Internet. There are still active traders amongst us today, who learned their craft from hand drawn charts plotted off the pages of the Wall Street Journal.
Much of the sophisticated technical analysis now available at the click of a mouse, was once an incredibly labor intensive job. It was also a far cry from the "real-time" data we now not only demand, but somehow take for granted.
In that by-gone era, charts were primarily based on price and the smallest unit of time utilized was the "daily" time frame as newspapers were only delivered.. once a day.
Variety Of Charts Available Today
Time and Price Charts - the old standby. Today, a daily chart might seem like an eternity to many. We now have access to charts in increments as small as one minute and available not after the fact, but as price unfolds, moment by moment.
Tick Charts - display a certain number of trades before printing a new candle. Unlike Price Charts, the tick chart is based simply on the number of trades. It doesn't matter if the trade is for 1 contract or 100, it counts as 1 Tick.
Volume Charts - In the equity markets, fractional ownership of a company is traded in what are known as shares. In the futures market we trade what are referred to as Contracts. Many traders stand firm on the belief that the more Volume a market possesses, the better the market. The fact that we can know not only what price was traded a minute ago, but also how much volume and how many transactions, as it happens... is surreal for the man who hand drew the chart above.
Range Charts - With a Range Chart we still have Time on the horizontal axis and Price on the vertical axis but we manipulate the expression of price per candle based on our pre-defined risk parameters. Once again, as a reminder, we do this in real time not the day after as a historical footnote.
The charts listed above while relatively recent developments in the grand scheme of Wall Street, are today considered by and large, to be standard fare for Emini Traders, as well as those who trade Stocks, Options, Mutual Funds, Bonds and Currencies.
Always pushing the envelope, skating on the bleeding edge of tomorrow in their quest to quantify data, we have charts today that are considered exotic by even the most advanced traders.
- Kagi Charts consist of a series of vertical lines based on price action. The lines on a kagi chart vary in thickness based on what price is doing. Sometimes the lines are thin, while at other times the lines will be thick and bold. Thickness is the most important aspect and what traders use to generate transaction signals.
- Ichimoku Charts or equilibrium charts, isolate higher probability trades and have been used primarily in Emini Charts and are now becoming popular in Forex as well. Ichimoku shows more data points and is considered by many to be the most difficult chart to read.
The New Role Of Emini Charts
Unlike the days of old when trading charts were used to simply plot historical data, modern charts are much more forward looking. While they still accurately depict where we've been, they now have the ability to tell us more about where we are. With the proper training, they can also tell a "chart whisperer" where the market might go. This is the true power of Emini Charts now available to traders.
With training and experience, a trader will learn to read his Chart like a newspaper, better yet - A Treasure Map! Every candle, bar, hook and crook on the chart is relaying important information from trader to trader. It is true that at a certain point the chart becomes noisy, but a skilled eye can read the noise as well. Even the "test pattern" on the screen can reveal valuable information. It serves as a graphic representation of investor and trader sentiment for whatever chart is being observed.
As part of your education to become an Emini Futures Trader, make sure your instructor and/or mentor, places a strong emphasis on learning to read the Emini Chart. The success of your Emini Trading Business will be a direct reflection of your ability to understand what the chart has to say. The chart is the voice of the market and it always has a story to tell.
To learn more about reading Emini Charts, contact the author of this article.
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