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AmiBroker TA Course

Reading Price Charts

A price chart is a rendering, not a recording. Between the trades that actually happened and the picture on your screen sit at least four decisions someone made on your behalf: which interval the bars cover, which chart style draws them, whether the vertical axis is linear or logarithmic, and how far back the window reaches. Change any one of those and the same history produces a visibly different picture. Nobody lied to you, and nothing about the market changed.

That is the uncomfortable idea this part is built around, and it is worth meeting early. Most people learn chart reading as a vocabulary — this is a trend, that is a range, here is a swing high — and never notice that every one of those words hides a threshold that someone had to pick. Two competent analysts looking at the same chart can classify it differently, both be applying their rules correctly, and both be right about what they said. The disagreement is not about the market. It is about the definitions.

What changes for you here

Section titled “What changes for you here”

By the end of this part you will still be looking at charts by eye. What will be different is that you will know which of your judgements could be written down as a rule, and what that rule would cost you.

Three things carry forward into everything that follows:

  • A visual judgement can be made objective. “That is a swing high” feels like perception. It is actually a comparison between one bar and its neighbours, and once you write down how many neighbours, a computer can do it. Part 9 turns this into the central technique of the whole course; this part is where the idea first appears.
  • Objectivity has a price, and the price is lag. A swing high cannot be confirmed on the bar it happens. You have to wait for the bars that prove nothing higher came afterwards. Every structure classification you make is therefore late, and the amount it is late by is something you choose, not something you can remove.
  • Definitions are choices, so state them. There is no correct number of bars either side of a swing point. There is only the number you used, which you should be able to say out loud, and whose effect on your conclusions you should have checked.

What you need first

Section titled “What you need first”

You need AmiBroker installed with a database containing at least a few years of daily data for a handful of liquid instruments — the workspace you assembled in Part 3. Nothing in this part needs the Professional edition, a real-time feed or a paid data subscription. Everything here works on end-of-day data that you can obtain for free.

You do not need to be able to write AFL yet. Four of the five pages include a complete formula, and you are asked to run them rather than to understand every line. They exist so that you can check a visual impression against a number, and so that the ideas in Part 8 onwards arrive as something you have already seen working rather than as new abstractions. If a formula does something surprising, that is useful information about your chart, not a problem with the formula.

How the part is arranged

Section titled “How the part is arranged”

The two lessons on chart types and axis scaling deal with the rendering itself: what each style keeps, what it discards, and why the same history can look like two different stories. The two lessons after them build the vocabulary of structure — swings first, then the higher-high / higher-low language that everything from support and resistance to regime filtering later depends on. The lab pulls it all into a procedure you can apply to any chart, in the same order, and get a written result you could hand to someone else.

Work through them in order. The lab assumes the swing definition from the third lesson, and Part 5 assumes the structure vocabulary from the fourth.

Part4 of 36Level1 — Chart ReaderPages5Estimated time2.3 hours

0 / 5 lessons in this part completed