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Alex Kirtland December 11th, 2006

This post first appeared at UsableMarkets, and is happily reposted here at CFM’s request.

I’m a huge fan of well designed charts. One of my favorite examples of a great a stock chart is over at stockcharts.com.

StockCharts example

First of all, the sequence of the stochastic indicators, to the price information, to volume, to MACD indicators tells a real story. The different trend lines, mapped with standard deviations (bollinger bands) allows momentum traders to pick the entry and exit points. Rising volume over time shows the increased interest in Ford over the summer and then the brutal sell off in mid-September ‘06.

Now, I am not a chartist, and nor do I believe that technical analysis of price information is the way to play the stock market. (And for those of you who are interested, technical analysis of stock prices has been shown, by economists of all people, not to be a good predictor of future stock price, despite all the fancy jargon of head and shoulders, reverse flags, and so on). However, as someone who likes great information design, this chart is hard to beat. (They should pay me for this.)

However, Google is giving them a run for the money.

Google example

This chart is perhaps the fundamental analysts wet dream, since it maps news items to stock price over time. On can see here how Ford’s offer to buyout some of its workforce actually had a negative effect on the stock price, perhaps not the positive response from Wall Street that they imagined.

In addition to mapping news items to price, dividend payouts are shown, the ability to easily manipulate the time scale, and the comparison of price on different time periods at the same time are also great features. For retail investors, no matter how they play the stock market, both these charting tools should be part of their arsenal.

But what about prediction market charts?

I have yet to be impressed by any charts coming out of prediction market land. While TradeSports has perhaps the best charting functionality, it does lack the sophistication of information design seen in the charts above.

Tradesports example

From this example it’s clear TradeSports’ has taken a more technical point of view for their charts. But one wonders if, for event futures, doesn’t mapping news events to price movement make more sense, ala Google charts?

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