Technical Analysis from A to Z

by Steven B. Achelis

PRICE FIELDS

Price Fields

Technical analysis is based almost entirely on the analysis of price and volume. The fields which define a security's price and volume are explained below.

Open - This is the price of the first trade for the period (e.g., the first trade of the day). When analyzing daily data, the Open is especially important as it is the consensus price after all interested parties were able to "sleep on it."

High - This is the highest price that the security traded during the period. It is the point at which there were more sellers than buyers (i.e., there are always sellers willing to sell at higher prices, but the High represents the highest price buyers were willing to pay).

Low - This is the lowest price that the security traded during the period. It is the point at which there were more buyers than sellers (i.e., there are always buyers willing to buy at lower prices, but the Low represents the lowest price sellers were willing to accept).

Close - This is the last price that the security traded during the period. Due to its availability, the Close is the most often used price for analysis. The relationship between the Open (the first price) and the Close (the last price) are considered significant by most technicians. This relationship is emphasized in candlestick charts.

Volume - This is the number of shares (or contracts) that were traded during the period. The relationship between prices and volume (e.g., increasing prices accompanied with increasing volume) is important.

Open Interest - This is the total number of outstanding contracts (i.e., those that have not been exercised, closed, or expired) of a future or option. Open interest is often used as an indicator.

Bid - This is the price a market maker is willing to pay for a security (i.e., the price you will receive if you sell).

Ask - This is the price a market maker is willing to accept (i.e., the price you will pay to buy the security).

These simple fields are used to create literally hundreds of technical tools that study price relationships, trends, patterns, etc.

Not all of these price fields are available for all security types, and many quote providers publish only a subset of these. Table 1 shows the typical fields that are reported for several security types.

Table 1
 FuturesMutual FundsStocksOptions
OpenYesNoOftenYes
HighYesClosed endYesYes
LowYesClosed endYesYes
CloseYesYes (*NAV)YesYes
VolumeYesClosed endYesYes
Open InterestYesN/AN/AOften
BidIntradayClosed endIntradayIntraday
AskIntradayClosed endIntradayIntraday

* Net Asset Value


This online edition of Technical Analysis from A to Z is reproduced here with permission from the author and publisher.

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