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SPINDLES® vs CANDLES

Description

Spindles Chart is a type of technical analysis which combines price and volume information in a single chart.
Like Candlesticks, Spindles are build based on Open, High, Low and Close prices in a given time interval – timeframe. But even if the “shadows” can be similar with candlesticks, the bodies do differ fundamentally.
When building bodies of Spindles 2 new parameters are calculated:

  1. Volume weighted average price
  2. Volume coefficient

Volume weighted average price (VWAP) shows activity in each time frame or more precisely, on what price level the biggest volume was traded for a given timeframe.

Volume coefficient or ratio (VR) shows trading activity in time intervals. i.e. by what ratio volume in the next time frame differs from the previous one.

In the following example we can observe that in a bullish pattern of a spindle (on the left side) and a candle (on the right side), the spindle reflects the level where the most of the trading happened – between open and close, but closer to the price of the opening.

In the bearish spindle, trading with the largest volume happened outside the Open – Close interval and was higher than opening price, i.e. VWAP > Open Price.

Formulae

Volume weighted average price for a given time interval:
VWAP = ∑ Price (n) * Volume(n) / ∑ Volume (n) ;

Volume coefficient for a time interval:
VR = V * nt / ∑ Vnt ;
V – volume of a given time interval,
nt – number of time intervals
.

These are main calculations for drawing 41 types of spindles, 20 bullish, 20 bearish and one “tick”  type, similar to a classic “doji” candlestick pattern.

Benefits of Spindles

1. A chart of spindles carries more information and is visually appealing. Spindles = Candles + volume, where both volume and prices are plotted on the same graph. Various shapes of spindles give additional visualization of trading activity.

2. Trading activity could be instantly observed inside one time frame and easily compared to other time frames.

3. In contrast to Candlevolume and Equivolume charts time axis (X axis) is reflected evenly and proportionaly, which is intuitively more comprehensible.

Comparison

For Comparison of chart types - click

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