So you’ve opened your new account and now you’re sat, staring at a selection box of financial goodies; Dax 30, FTSE 100, Gold, Google…..What do I do first?

You need to find an edge; that reason to sell the FTSE or buy gold. You might have got a hot tip from Stan down at the Red Lion or perhaps you just fancy the name Xstrata.

Either way, you can’t just hit the trade button without a bit of background work. You need some help to decide whether the price is more likely to rise or fall-whether you should buy or sell. Today I’m going to run through the absolute basics of how to start using the charts, then in Part II tomorrow I’ll talk a bit about technical analysis and how I use charts for my trading.

News Flow
Trading as an individual is a world apart from the big City trading desks you see on the telly. In terms of news flow there are systems that will give you the economic releases at exactly the same time as the big boys. Generally, free services will be delayed by enough time to kiss goodbye to trading the news, but if your strategy is to trade longer time periods these might be fine.

But when it comes to company information, Henry from XYZ Investment Bank isn’t going to give you the inside track on the latest company he’s just been to visit. And how often has a huge move in a company’s share price been followed by news of a take-over, or a profit warning? Face the facts; we’re not going to compete on news flow.

Charts Tell The Story
How can we compete? No problem; you’ve heard the phrase; “a picture paints a thousand words”. Well, a good chart will tell you plenty in the time it takes to Google up the research on your chosen bet.

Charts
Opening up a chart is as easy as clicking on the first icon to the right of the ‘Order’ button (the one in the red circle).

If you’re in the demo account your chart will look something like this:

If you’ve opened a real account your chart will be a bit different:

You can see that the chart patterns are pretty close, but there’s a slight difference to the toolbar layout. However, the biggest difference is that Network Rail provides prices on the demo chart; they’re delayed by 15 minutes.

There are plenty of tools on these charts that I’ve never used; Libraries are bursting with different strategies for using technical analysis (think Hogwarts for grown ups) and the idea is that the tools are here if you need them.

But as this is the introductory tour I’ll set out the ‘need to knows’ and deal with the heavy stuff once you’ve settled in.

Lines, Bars And Candles
There are three main ways of representing the price on a chart, line, bar and candle.

If we use a car analogy the line graph would be Henry Ford’s prototype; the basic model, you get what you see. For some traders this is great, an easy to read line, showing you just where the price is. The trouble is that once you start adding a few moving average lines your chart looks like it’s been over-run by break-dancing spiders.

The bar chart is a sort of Ford Mondeo, a massive improvement on the original with a few more bells and whistles. Whereas the line chart only shows the closing price for the period (see next section on periods), the bar chart also shows the high and low prices for that period. The standard model shows the close as a little mark on the right-hand side of the bar; the Ghia model also includes the opening price on the left-hand side. The bar chart gives you a feel for how the price has been behaving during the period as well building a picture over the longer period. It’s a bit like watching the edited highlights of a game rather than just seeing the final score.

Just like in modern times, the Japanese came up with this top of the range model; candles, the Lexus of chart analysis. Candles go that step further than bars; the same information (open, close, high, low) is portrayed in a way that allows further analysis of their patterns. Trained users can pick up trends, and changes in trends, over any time period by analysing candle patterns. To me candles are the dog’s do-da’s and I strongly recommend having a read of our beginners’ intro to Candlestick Trading Signals.

Why not give all of the above a go and see which one floats your boat?
On the demo account chart, clicking on Chart Type will give you a drop-down menu of choices.
On the real account, click on Settings in the bottom left-hand corner of the chart. At the top of the menu, opposite Style, there’s a drop-down menu of choices.

Time Frames
Often referred to as ‘periods’, time frames have something for everyone from the full-time day trader to the guy with a full time job who takes a longer approach, basing his trades on the daily close.

The time frame is the period that each bar or candle represents. This ranges from as short as 1 minute to as long as daily or weekly (some charts, including the demo, even include monthly bars).

To change the periods on the demo chart, click on Time Scale to bring down the menu.

On the real account, click on the box in the bottom right-hand corner of the chart, just to left of the mini-magnifying glasses. It’s the box with either minutes, daily or weekly in it.

Just like the candles above, and all the other wonders of technical analysis, the final choice is yours; it’s what you feel most comfortable with.

In Part II I’ll give an insight into how I use different time frames for trading and say why I think technical analysis works.