Candlestick Charts

CANDLESTICK CHARTS

What is Candlestick Chart? A candlestick chart is a style of bar-chart used primarily to describe price movements of a security, derivative, or currency over time. It is a combination of a line-chart and a bar-chart, in that each bar represents the range of price movement over a given time interval. It is most often used in technical analysis of equity and currency price patterns. They appear superficially similar to box plots, but are unrelated.thought to have been developed in the 18th century by Munehisa Homma, Japanese rice trader of financial instruments

Best Practices while using Candlestick Chart:-

Below mentioned are some of the best practices which are often used while plotting Candlestick chart –

  1. Blue (or green) candlestick if the close is higher than the open;

  2. Red candlestick if the open is higher than the close (i.e. the candlestick is filled);

  3. The same color as the previous day, if the open is equal to the close.

  4. Long white real body visually displays the bulls are in charge

  5. Long black real body signifies the bears are in control.

  6. Small real body (white or black) indicates a period in which the bulls and bears are in a “tug of war” and warns the market’s trend may be losing momentum.

While the real body is often considered the most important segment of the candlestick, there is also substantial information from the length and position of the shadows. For instance, a tall upper shadow shows the market rejected higher prices while a long lower shadow typifies a market that has tested and rejected lower prices.

Advantages of Candlestick Chart :

– Easy to understand the pattern & trend

– Provides historical analysis as well in a compact form

– Candlestick charts not only show the trend of the move, as does a bar chart, but, unlike bar charts, candlestick charts also show the force underpinning the move

Industry Usage :

– Candlestick charts are a visual aid for decision making in stock, foreign exchange, commodity, and option trading.

– Analyze currency comparison (lets say Indian rs is higher or lower at the end of the day as compared to starting of the day) – correspondingly we can fill the box with some shade or color etc

Candlestick Industry Example

Radar Charts (Spider Chart)

RADAR CHARTS (SPIDER CHART)

What is Radar Chart? A radar chart graphically shows the size of the gaps among five to ten performance areas. The chart displays the important categories of performance and makes visible concentrations of strengths and weaknesses. The relative position and angle of the axes is typically uninformative. Radar charts are visually striking, and can add interest to what would otherwise be a dry data presentation.

Generally used with

– To visually depict the incremental improvements over a period of time

– To measure performance against benchmarks

– As a visual snap shot of progress over several criteria

Caution?

The following points need to be kept in mind while designing Radar charts.

– Also, with many data points, it becomes difficult to identify the values. In those cases, petal charts are used.

Industry Specific Example?

– Used to plot a players weakness & strength

– Control of quality improvement to display the performance metrics of any ongoing program

– Comparing various cars based on their fuel efficiency, manoeuvrability, pick-up and engine power

Marimekko Charts – Data Visualization

MARIMEKKO CHARTS

What is Marimekko Chart? A Marimekko chart is a two-dimensional 100% chart, in which the width of a column is proportional to the total of the column’s values. Data input is similar to a 100% chart, with data represented as either absolute values or percentages of a given total.

Marimekko charts are widely adopted in Marketing for example to analyze customer segmentation and market segmentation.

This graph encodes two quantitative variables: one using the height and one using the width of the bars. For example – By attending to the heights of each bar segment, we can see what percentage of each company’s total sales were handled by each of the three sales channels. By attending to the widths of the bars, we can see the relative magnitudes of each company’s total sales. Each company’s sales in each individual channel is encoded through the areas of the rectangles (that is, the individual bar segments).

For instance, comparisons between Reebok’s U.S. sales and Adidas’ International sales can be made by comparing the areas of the two rectangles that represent them.

Caution?

The following points need to be kept in mind while desiging Marimekko charts

 – Bars should be of the same heights

– Values in the columns to be preset in the percentage format

 Disadvantages of Marimekko Charts?

– Viewing graph as a whole is fine & reveals a lot of insights, but when we want to make comparisons between individual specific boxes, that is generally difficult.

– Marimekko graphs suffer from a problem that plagues any stacked bar graph: It is difficult to accurately make comparisons of the width or height of boxes that are not arranged next to one another along a common baseline.

Industry Specific Example?

– Generally used for marketing analysis all competitors in a particular market segment and individual share of competitors in each of the market segments. For ex – market share of three mobile handset makers (Nokia, Samsung, Motorola) in three segments (feature phone, smart phone, basic phone) and the share of each segment in the market itself using Marimekko charts

BUBBLE GRAPH / BUBBLE CHART

BUBBLE GRAPH / BUBBLE CHART

What is Bubble Chart? A bubble chart is used to visualize a data set with 2 to 4 dimensions. The first two dimensions are visualized as coordinates, the 3rd as color and the 4th as size. Bubble charts can facilitate the understanding of social, economical, medical, and other scientific relationships.

Bubble chart is often considered as an extension of scatter chart with the size & color factor also being introduced.

Caution?

Human visual system can feel the difference in the size, but with change in the radii (3rd dimension or variable), the corresponding change in the area is non linear. Hence proper care must be taken so that the change in the area is liner by mathematically altering the change in the radius according to the variables value.

Industry Specific Example?

– Project management to compare the risk and reward among projects. In a chart each project can be respresented by a bubble,the axis can represent the net present value and probability of success and the size of the bubble can represent the overall cost of the project

– Revenue contribution from different products & sales

Example of a Bubble Chart Usage

Pie Chart – Data Visualization

PIE CHART

What is Pie Chart? A pie chart (or a circle graph) is a circular chart divided into sectors, illustrating proportion. In a pie chart, the arc length of each sector (and consequently its central angle and area), is proportional to the quantity it represents. When angles are measured with 1 turn as unit then a number of percent is identified with the same number of centiturns. Together, the sectors create a full disk. It is named for its resemblance to a pie which has been sliced. The size of the sectors are calculated by converting between percentage and degrees or by the use of a percentage protractor. The earliest known pie chart is generally credited to William Playfair’s Statistical Breviary of 1801.

When to use :

Its recommended to be used when a piece is to be compared with respect to the total.

Pie charts work particularly well when the slices represent 25 to 50% of the data, but in general, other plots such as the bar chart or the dot plot, or non-graphical methods such as tables, may be more adapted for representing certain information.

Do the parts make up a meaningful whole? If not, use a different chart. Only use a pie  chart if you can define the entire set in a way that makes sense to the viewer.

Are the parts mutually exclusive? If there is overlap between the parts, use a different chart.

 

 

 

 

 

 

 

Difficult to compare individual pieces

Do you want to compare the parts to each other or the parts to the whole? If the main purpose is to compare between the parts, use a different chart. The main purpose of the pie chart is to show part-whole relationships.

How many parts do you have? If there are more than five to seven, use a different chart. Pie charts with lots of slices (or slices of very different size) are hard to read.

– While designing pie chart, make sure that slices are mutually exclusive; by definition, they cannot overlap. The data therefore must not only sum up to a meaningful whole, but the values need to be categorized in such a way that they are not counted several times.

Research suggests that we look at the angle in the center, essentially reducing the chart to just the crossing lines there. We are not very good at measuring angles, but we recognize 90 and 180 degree angles with very high precision. Slices that cover half or a quarter of the circle will therefore stand out. Others can be compared with some success, but reading actual numbers from a pie chart is next to impossible.

Industry specific examples of Pie Chart Usage :-

If a company has five divisions, and the pie chart shows profits per division, the sum of all the slices/divisions is the total profits of the company.

Pareto Chart – Data Visualization

PARETO CHART

What is Pareto Chart? Pareto chart is a data visualization tool which contains both bars & line graphs. In this, individual values are represented in decreasing order by bars & the cumulative total is represented by the line. Its named after Vilfred Pareto, an Italian economist and sociologist who conducted a study in Europe in the early 1900s on wealth and poverty. He found that wealth was concentrated in the hands of the few and poverty in the hands of the many. The principle is based on the unequal distribution of things in the universe.

Pareto Chart Example

When to use : Whenever we are having a number of factors, then pareto chart is used to highlight the relative importance (since the bar graphs are also arranged in decreasing order).

See the typical use cases highlighted below

– Used in customer care to show the most coomon customer dis-satisfaction factors

– Can be used in quality control to show common source of defects

The Pareto chart is generally used to you focus your improvement efforts on those issues that: 1.) Cost the most or 2.) Pose the highest risk / liability or 3.) those areas that occur the most often.

Dos & Donts :

If used properly, pareto chart can help a lot in understanding the key factors. The below mentioned factors are to be kept in mind & if used in conjuction, can provide a lot of actionable insight

a. Sub division :- It means, lets say at a customer care post using pareto they have found out that from a specific location maximum complaints are coming. Now, ideally they should further design a pareto for that specific location to get more insights (like in some cases there might be some complaints from a specific part of location because of some miscellaneous factor etc)

b. Multi-perspective analysis :- We should also do a multi-perspective analysis for ideal insights. For examples – if we take above case, not only they should do an analysis location wise but also reason wise & service wise etc. This might give them specific reasons for specific locations & hence counter measure can be taken to sort out the matter.

c. Repeast Analysis :- This depends on case to case or industry to industry basis, but based on their true knowledge & how they think the data dynamics are changing, the pareto charts should be updated & redesigned.

This is generally know as first level pareto analysis, second level pareto analysis (this is pareto analysis of the first bar of first pareto analysis) & third level pareto analysis (this is pareto analysis of the first bar of second pareto analysis)

Industry specific examples of Pareto Chart Usage :-

Below mentioned are some of the real world example usages of Pareto chart usage in industries & business organizations for data visualizations & analysis

  • Marketing – Where are the majority of my advertising dollars going? Which channels produce the most sales leads?
  • Healthcare – What types of infections are the most prevalent? What procedures are associated with the majority of return hospital visits?
  • Sales – Does a small percentage of customers account for a large percentage of revenue? If so, which ones?
  • Customer Service – How can I improve customer satisfaction? What do customers complain about the most?
  • Manufacturing – What defect types are most prevalent & key to improving an inspection process etc

Data Visualization – Best Practices & When what to use

Data is of no importance until & unless we are able to extract some information from it. Effective data visualization is very important for the decision making process. This helps decision makers to examine data, see trends, take actions.

The key to success in using data visualization is ensuring that: the best and most appropriate types of visualizations are used; for different kind of data with different number of variables inn it, different data visualization comes into picture & it only can be the best fit for visualization of such kind of data With a good set of visuals that keep these key success factors in mind, decisions can be made more quickly and with more confidence so that your business can continue to grow.

There are myriad number of tools available in the market. This blog will help you in understanding, when to use, what to use, how to use. We would be your one stop solution & will provide you invaluable advices for your data visualization techniques.

Every week, we would be adding 2-3 in depth analysis of different charts & graphs.

REMEMBER – DATA VISUALIZATION IS NOT A SCIENCE BUT AN ART TO BE PERFECTED

a. Basic Charts (pie, graphs, bar etc)

b. Status Indicators (gauges, traffic lights, symbols)

c. Advanced Data Visualization tools (heat charts, spark line, scatter chart, sparkle graphs, tree maps etc)

We would dissect each & every data visualization method existing, one step at a time.

High End Data Visualization