Days that Do Not Matter | CTFA Exam Question Answer | ABA Provider

Days that Do Not Matter

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Question

In which of the following charts days do not matter?

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Explanations

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A. B. C. D.

D

The correct answer is D. Point and figure charts.

Point and figure charts are a type of chart used in technical analysis to represent changes in price over time. These charts are unique in that they do not use a time axis. Instead, they use X's and O's to represent price movements.

The X's represent price increases, while the O's represent price decreases. The X's and O's are plotted on the chart based on predefined rules that consider the magnitude of price changes.

Point and figure charts are useful for identifying trends and support and resistance levels in a security's price. Since they do not use time as a variable, they are particularly useful for analyzing securities that do not trade frequently or have irregular trading patterns.

On the other hand, line charts and bar charts do rely on a time axis. A line chart shows the price of a security over time by connecting the closing prices of each period with a line. Bar charts represent price movements by using vertical bars that indicate the high, low, opening, and closing prices for a given period.

Pie charts, on the other hand, do not show changes over time, but rather represent a snapshot of a single moment or category. They are used to display relative proportions of different categories in a dataset.