Saturday, December 07, 2019 12:37:57 PM
The meaning of colors on bar charts is frequently misunderstood. Various platforms and various brokers use different systems to indicate various things with colors. Some use red and green. Some use red and green and yellow. Typically red is referred to as "a sell", and green as "a buy". But that doesn't mean that if you see a red volume bar there was only a sell.
On most systems when volume causes the price to uptick, then it is assigned the color green. And when the price remains the same or declines, it is assigned red. On some systems the color indicates whether the trade went through on the bid or the ask. Personally I don't find the colors useful at all. And they can cause a lot of confusion. For example if there is a lot of red, many will think there were more sells than buys, when in truth just as many shares were bought as sold. Because volume is only created when shares trade between a buyer and a seller. For me the direction of the graph is more interesting, indicating if the price of the stock is going up, down, or remaining the same.
Though I guess colors help for seeing where the price was going at any given moment. You can glance at the day's chart and say, "Well, over here this patch of trades took place while the price was going up, while over there the trades took place while the price was going down.
Hope this helps.
Here's an interesting article:
https://www.stockmarketeye.com/blog/reading-colors-in-stock-charts-green-and-red-explained/
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