6 – M1L3 09 Open High Low Close V4

Investors like to focus on pieces of data that are most important. One way to do that, is to take the tick data and bucket it into regular intervals of time. It could be minutes, hours, days, months, extra. Then summarize all the trades that happened during each interval using measures that are relevant to you. Let’s take a closer look at one of these intervals. Let’s say it’s a minute. The most common set of measures used in practice are Open High Low Close or OHLC. Open is the stock price at the beginning of the period, high and low capture its range of movement, and close is where it ends. These measures are often visualized using OHLC bars, which show these four measures for each time interval in a compact form. This gives you a high level summary that might better represent price movements than looking at lower prices. Here’s an OHLC chart, that shows a month of price data bucketed into single days. You can spot days where the intraday prices jumped beyond opening and closing prices, indicating a lot of volatility. If you try to plot all the individual takes over this period, it would be hard to identify these patterns. Sometimes these measures are used for a very specific purposes. The daily closing price is the one that is coded most often. It is used by casual traders and investors who are interested in long-term gains. It is also used for accounting purposes. The opening price, is where you would expect the first trade of the day to take place. There might be a gap from last day’s closing price, because of pre-market trading or trading in other markets. Some trading strategies try to utilize this difference. High-low, the high and low prices capture the movement of the stock. These peaks are easier to remember for humans compared to individual trades or the distribution of prices during that period.