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How to Start with Metatrader 5
newdigital, 2014.03.28 19:22
Indicator for Kagi Charting
The article "Indicator for Point and Figure Charting" has described one of the programming ways of creating Point and figure chart.
This chart is known since the 19th century. However, this is not the
only chart from the remote past. Another notable representative of the
early types of the financial market representation is Kagi chart. This chart will be discussed in the present article.
The stock exchange – financial institution unfamiliar to the
19th-century Japan – has been established in May 1878. It is known as Tokyo Stock Exchange
nowadays. This event played a vital role in creating and subsequent
development of Kagi charts. Europe and USA came to know Kagi charts
after the publication of Steve Nison's "Beyond Candlesticks: New Japanese Charting Techniques Revealed" in 1994.
The Japanese words "Kagi" means an L-shaped key that was in use at
the time of the chart development. Also, there is a modified version of
the name – "key chart". In Steve Nison's "Beyond Candlesticks", you can
also find alternative names of the chart: price range chart, hook chart,
delta or chain chart.
What is so special about this chart? Its main feature is that it
ignores the time scale leaving only the price one (unlike Japanese
candlesticks, bars and lines). Thus, the chart hides inconsiderable
price fluctuations leaving only the most significant ones.
The chart represents a set of thick Yang and thin Yin lines
replacing each other depending on the market situation. In case the
market moves in the same direction, the line is extended reaching a new
price range. However, if the market turns back and reaches a predefined
amount, the Kagi line is drawn in the opposite direction in the new
column. The predefined amount is set either in points (usually used for
currency pairs), or in percentage value of the current price (usually
used for stocks). The line thickness varies depending on the closest
High or Low breakthrough.