Saturday, February 27, 2010

Charting 101

Given the dismal response to the chart of the week contest, I thought a couple of suggestions and hints might be in order to help get the graphics flowing.

For starters, creating charts is easy. Making charts that tell a compelling story only requires a little bit of insight and effort. Sometimes the best way to make a interesting chart is just to look at a bunch of them until one of them jumps off the page and forces you to take notice.

A good place to start with charting is your favorite broker. For those who like to use a third party specialty chart tool, one of the best free charting sites is at FreeStockCharts.com, where you can create an attractive chart that is as simple or complex as you wish in one or two minutes.

For those wishing to subscribe to a charting service, my personal favorite is StockCharts.com, where you can maintain a stable of charts that are customized to your liking. Non-subscribers can create a fairly comprehensive view of almost any security, ratio, etc. using gallery charts. There are a number of attractive features that are also available for free. These include an extensive group of public chart lists that are the product of some of exceptionally talented technical analysis practitioners, a ticker cloud of the most popular current charts and a sharp charts voyeur that keeps tabs on charts being created by others.

Keep in mind that with the explosion of ETFs, it is possible to slice and dice the investment universe with almost infinite precision and variation. Also, a screen capture tool such as Screen Hunter can make it easy to capture any chart for posterity.

For those who are partial to fundamental data, there is the Federal Reserve Economic Database (FRED), where you are never more than two clicks away from creating your own customized chart of economic data. The Bureau of Economic Analysis, National Bureau of Economic Reserach and U.S. Census Bureau are three of many other excellent sources for government data.

If your interests run more toward concepts and ideas, Google Trends can churn out some fascinating charts in a matter of seconds.

Finally, many providers of specialized data publish their own charts. Two that I like to refer to on a regular basis are the CBOE VIX term structure and the ISEE call to put ratio. [If you intend use a chart created by a non-governmental third party, I always recommend asking for permission in advance.]

So…the one year free subscription to Expiring Monthly: The Option Traders Journal is still up for grabs. Where is the winning chart?

For more on related subjects, readers are encouraged to check out:

Disclosure(s): I am one of the founders and owners of Expiring Monthly

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