What is a chart?
When my wife gave birth to her third child, I accompanied her to the hospital and, while watching the contraction monitor graph, I said, “It’s like stock prices.” Before I knew it, I was dressed in a nurse’s white coat, gradually pushed back, and I was made to participate in the delivery as an observer. We must be careful, you know.
Turn stock prices into a chart—.
We, in particular, take it as “price movement” without much thought, but is that really okay?
There are books on “the central mean line” that mechanically decide buy and sell through chart pattern analysis, and they describe it as follows.
K-line is the movement of prices drawn as lines aligned with the scale. It is easier to grasp the nature of the fluctuations than simply listing numbers. The fluctuations are recognized as “trends.”
（From the second part of the “New Edition of the Central Mean Line Positioning Method”）
That is exactly right. We are looking at the price “trend.”
However, the very meaning or purpose of the chart is not touched upon.
In fact, there are people who deny chart analysis, no, deny charts themselves.
“Stock prices come into being only through the clash of individual buy and sell orders. The person who sold an instant ago and the person who is selling now are probably different. Even after one second, the same applies. And yet, to treat stock prices as a ‘continuous phenomenon’ is illogical. It is also odd to connect yesterday and today on a chart, or last week and this week.”
Indeed, there is some truth in that.
But in order to deal with stock prices that rise and fall over time, we must regard them as “continuous.”
Information is processed according to the sender’s intentions and convenience. Emphasizing the parts one wants to convey, adding values, omitting negative aspects about oneself, and so on—facts are distorted through some filter.
On the other hand, many people view charts as “price information itself,” but treating individual trades as continuous events is itself a kind of “processing.”
There are charts by day, by week, by month, and intraday charts such as 1-minute and 5-minute charts—classified by the “period” used. Each often cuts out portions and judges them in a “collective form” to think about the tendency of rises and falls. However, for example, the appearance of “shape” differs between daily and weekly charts. In other words, a completely different difference arises from differences in the map’s scale.
Charts are not true “facts.”
Those who execute trades treat stock prices as continuous and process information from various angles to “see them in a form.” The definition of a certain degree of “trend” in stock price fluctuations is also only a hypothesis, used for convenience, and it is important to recognize that.
Before using any chart that happens to be within reach, one must consider whether the assumptions and definitions used to create that chart align with one’s own trading style. It is also essential to have one’s own perspective rather than a forecast that everyone points to.
Not only is the chart itself processed, but the information that says “look, this is what happened, so it will go up” is a value judgment based on a specific standard.
