DEFINITION of 'Daily Chart'

A line graph that displays the intraday movements of a given security. This contrasts to longer term charts, such as those that show a security’s movement over a period of days, months, or even years. Daily charts may also refer to charts that show each bar or trading session as a single day rather than a week or month.

BREAKING DOWN 'Daily Chart'

Daily charts display all of the price movements for the period. Often times, day traders use these charts to implement short-term trading strategies. The term may also refer to charts that show each bar or trading session as a single day. In these instances, daily charts may contain several months’ worth of prices with each bar or candlestick representing a single day.

In the above example, each candlestick represents a single day or trading session for the SPDR S&P 500 ETF (SPY). Note that there are about five months’ worth of trading data contained in the chart, which differentiates it from an intraday chart.

The line between days may be blurred in some markets. For example, the foreign exchange (forex) market operates 24 hours per day, which means that there is technically no stoppage of trading between one trading day and the next. The convention in these cases is to consider a single day to be 5:00 p.m. Eastern Time to 5:00 p.m. Eastern Time the next day. Most websites and applications that provide daily charts are automatically displayed this way.

Multiple Time Frames of Daily Charts

Many day traders incorporate daily charts in their trading setups that span multiple time-frames. For instance, day traders may have three monitors displaying minutely, hours, and daily charts to get a more complete picture of a security’s trading action.

Day traders use daily charts as their primary source of information for the day where they scan for opportunities. They may look for key areas of support and resistance that wouldn’t necessarily show up on shorter term charts.

Hourly and by the minute charts may then be used to see a finer level of detail. Traders may look at these charts for areas of intraday support and resistance, while keeping in mind the longer-term support and resistance levels identified earlier. The downside is that these shorter-term charts tend to have more volatile price action that can make it difficult to spot trends compared to daily charts or longer-term charts that tend to be smoother.

The Bottom Line

Daily charts are line graphs that displays the intraday movements of a given security, but they may also refer to charts where bar or candlestick represents a single trading day. Many day traders use a combination of charts to get a clear picture of the trading action for a particular day with each chart showing a different perspective.

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