DEFINITION of 'Bar'
A bar is a graphical representation of a stock's price movement that contains the open, high, low and closing prices for a set period of time or a specified set of data. For example, if a trader is working with daily data, one bar represents the set of quotes for one day. In the case of a one-minute bar, it represents the price data for one minute.
BREAKING DOWN 'Bar'
The most commonly used bars are the OHLC, and the candlestick bar. An OHLC bar is constructed with one vertical line and two short horizontal lines. The vertical line, referred to as the bar, represents the range of the price data for the specified time period. The four price data points that make up the OHLC bar are represented as:
Open: Short horizontal line to the left of the bar
High: Top of the bar
Low: Bottom of the bar
Close: Short horizontal line to the right of the bar
The components of a candlestick bar are a vertically positioned rectangle referred to as the body of the bar and two vertical lines connected to the upper and lower sides of the rectangle referred to as shadows. The price information represented by the candlestick bar is basically the same as the OHLC bar with a couple of additional elements. Both the high and the low prices are similarly represented by the highest point of the candlestick bar and the lowest point, respectively. The open and close, however, are represented in a slightly different manner. The body of the candlestick bar is displayed in two different colors depending on the price action of the bar.
Typically, a bar with a closing price higher than its opening price is referred to as an up bar, and in the case of a candlestick bar, the body is filled with a light color or no color; it is hollow. In this case, the opening price is represented by the bottom edge of the body, and the closing price is represented by the upper edge of the body. For a down bar, this is when the closing price of the bar is lower than the opening price; the body is filled with a darker color. In this case, the opening price is represented by the upper edge of the body, and the closing price is represented by the lower edge of the body.
Timeframes and Tick Charts
The timeframe used for a bar is dependent on what a trader is analyzing. For long-term investors who are analyzing a wider scope, daily, weekly or monthly bars are more appropriate. For short-term or intraday traders who trade fast moving markets, 60-, 30-, 10- or even one-minute bars are better suited for following fast markets. Some traders prefer tick bars. These represent a specific number of trades as opposed to a specific time period. These types of bars allow for more flexibility for intraday trading of fast moving markets.