Bailout

The new type of stock chart

By Felix Salmon

A couple of weeks ago, I wondered whether it was possible to see what a stock graph would look like if it split up the x-axis according to volume rather than according to the time of day. After all, when trading is concentrated at the beginning and end of the day, those are the areas worth concentrating on, right?

Wonderfully, Omer Uzun of Proteus Financial rose to the challenge. And here’s the result:

The chart splits the 390-minute trading day between 9:30am and 4:00pm into ten chunks. On the normal stock-market chart, seen in blue, each chunk is 40 minutes long. But on the volume-based chart, in red, the first 10% of trading is already over after 17 minutes, while at lunchtime it takes over an hour to see 10% of the daily volume change hands.

I’ve only seen one of these charts so far, but at first glance it does seem as though the volume-based chart seems less volatile — smoother, somehow — than the time-based chart. I wonder what the equivalent chart for May 6 would look like.

Full post as published by Macroprudential on September 22, 2010 (boomark / email).