The Trade Summary
There are millions of trades that take place in a day. It becomes difficult to track each and every stock. Therefore, a trade summary tracks the Open, high, low, and close.
Now, let’s understand this in detail
The Indian stock market is open for 6 hours and 15 minutes, from 9:15 AM to 3:30 PM. During this time, millions of trades take place. For any single stock, an exchange of shares is carried out every few minutes. Do we, as market participants, need to follow all the different price points that a deal is struck at?
To further illustrate this, let us look at this imaginary stock in which trades exist. See the picture; each point is a trade transacted during a certain moment. If one plots a graph from 9:15 AM to 3:30 PM with every second taken into account, there will be numerous points, and the chart would appear jumbled up.
The market was open from 9:15 AM till 3:30 PM, and it was filled with numerous trades. It’s almost impossible to follow every single price point. Thus, a basic overview of the trading behaviour is preferable rather than focusing on minutiae.
In order to get a comprehensive picture of price movements, we should track the Open, high, low, and close.
Open Price – When the markets open for trading, the first transaction that occurs is known as the opening price.
A higher closing figure than the open signals profitability, while lower numbers point to a negative outcome. We will discuss this subject further as we progress through this module.
At the end of the trading day, closing prices can indicate the market sentiment and act as a benchmark for the following day’s trading. This makes closing more significant compared to opening or high and low prices.
The main markers for technical analysis are open, high, low, and close prices. Plotting and analysing them on the chart is necessary.