Colours, clashes and clichés: How and why use colourful charts

Plowden & Smith are an expert art and antiques conservation business in south London who I follow on LinkedIn. Tackling projects great and small, their level of expertise and willingness to share some of it is refreshing. Very recently they published a video piece on colour theory where Hugo Nathan, of art advisory firm Beaumont Nathan, picks a series of works on the subject for a fantasy exhibition he is curating.

What’s all this got to do with technical analysis, you ask. Because colour, and colour combinations, really do matter. How long have many new home owners spent agonising over dabs of paint and swatches of fabric. Yet rarely do we put as much time and thought into our chart’s colours. Too often we just stick with the default setting.

Originally this was charcoal on white graph paper, sometimes pale green squares – often used in fractional rather than decimal divisions. Always using pencil, where mistakes can be rubbed out, though some brave souls used ultra-fine black marker pens for added definition. Candlesticks like three white knights and three black crows only make sense in this colourway.

The first chart packages tended to follow the style of news vendors like Reuters and Bloomberg, with green or orange font/lines on a black background. Tiring on the eyes – there is a reason why print text is black on white – and terrible for the environment when printing on paper as so much ink is used.

Bar charts can only be in black (on white), or a bright colour on black; line charts will have as many colours as you need to differentiate each series of data. When stock brokers took to candlestick charts they insisted that up-days must be green and down-days red. Trouble is, in China red is an auspicious colour and they do things the other way round, red reserved for rallies.

I’ve often incorporated the company’s colours into my charts, just as other promotional material will stick to logos, fonts and colour schemes approved by the marketing department. Swiss bank UBS sticks to red, white and black (competing with HSBC along the way); navy and red are another popular choice.
Reuters Eikon used to have a series of pre-set colour combinations which were intended as thematic choices. With names like ‘jazzy’, ‘patchwork’ and several more, as each analytical feature was added it would follow a set series of colours intended to create a harmonious picture. ‘Patchwork’ was syrupy and grim.

Needles to say, the art expert has a lot more to say on the subject.

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About Nicole Elliott

Nicole Elliott

A graduate of the London School of Economics and Political Science (BSc Social Psychology) Nicole Elliott has worked in banks in the City of London for the last 30 years. Whether in sales, trading or forecasting technical analysis has always been the bedrock of her thinking. Key expertise lies within all areas of treasury: foreign exchange, money markets, fixed income and commodities.

She has also added to the body of knowledge of the industry writing the first western book on Ichimoku Cloud Charts. Strong media links and a cult following are due to her prescient calls on the markets and often entertaining format.

Nicole can be contacted at trending@sta-uk.org

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