Equivolume

What Is Equivolume?

Equivolume is a type of trading chart that merges price and volume data into each datum point and visually portrays them as rectangular bars for the period being referred to.

Like candlesticks apparently, the level of each bar addresses the day's trading range, yet the width of the bars will likewise fluctuate corresponding to the amount of trading volume during that day.

Figuring out Equivolume

Equivolume is a technical chart that shows the price scopes of a security, like a stock, and its trading volumes and plots them together as one piece of data. It is a device in a technical analyst's tool compartment that aids in their analysis of a security's reasonability as an investment.

The level of each bar addresses the high and low for every period (frequently a day, yet can likewise be tailored from intraday to month to month or longer) and the width addresses the volume for every period relative to the total volume traded throughout the predetermined time span being examined.

Equivolume versus Candlestick Charts

This type of chart is very like candlestick charts, then again, actually the trading volume is incorporated into the data point instead of added as an indicator as an afterthought. The visual aid for volume combined with the high/low may be more valuable for the technical analyst concentrating on the chart.

For example, generally talking, a wide bar is considered to be more critical than a thin bar since large volume as a rule goes before a huge price move. Breakouts, or breakdowns, of a security's price action are much of the time joined by higher trading volumes, and more extensive than-normal bars that show up on an equivolume chart can furnish a trader with a signal to make a move.

Special Considerations

No single technical chart is secure, of course, so a trader who utilizes an equivolume chart ought to go to different devices to assist with directing their trading. Likewise, an equivolume chart, dissimilar to a candlestick chart, doesn't display open and close data points of the security. The high and low points of a security on a bar are critical data, yet extra trend data that a technical analyst might need to see are where a security's price opens and closes.

A security that closes below its opening price for a day, whatever the level of the bar, yields an alternate clue to an analyst than the opposite situation where a stock closes over its opening price. Taken over numerous periods, open/close data points can outline a trend that might be muddled in just an equivolume chart alone.

Highlights

• An analysis of equivolume charts is that they don't show a security's open and close prices.
• The level of each bar addresses the high and low for every period and the width addresses the volume for every period relative to the total volume traded throughout the predetermined time span.
• Equivolume charts consolidate price and volume of a security into a single chart, addressed by bars of differing level and width.