Chart Overlays

Chart overlays allow you to superimpose on your chart certain technical studies or an additional security or index chart. This allows you to see how movements in the overlay correlate to movements in the security price.

Study Overlays: Some traders find that the relationship between a study's lines and the price chart may be an early indicator of shifting price trends. They may use this information as part of the decision to enter a position if the trend seems positive, or exit or short if it suggests a downward trend.

Index and Security Overlays: Comparing an index or other security can help demonstrate how the stock is performing in relationship to the market.

Setup Chart Overlays by clicking the "expand" icon in the Chart Settings panel.

NOTE: Interpreting studies is a complex subject, so it is recommended that you learn as much as possible about Bollinger Bands and Moving Averages before incorporating these Chart Overlays into your trading strategy. Many books, web sites, and third party educators are available to further your understanding of Technical Analysis.

Get a quick overview of all the Chart Tab features in this self-paced Charts training course.

Overlays can display another symbol, index chart, Bollinger Bands, SMA, EMA, or MA Envelope on top of your current chart.

Stock and/or option symbols and price and volume data shown here are for illustrative purposes only. Charles Schwab & Co., its parent or affiliates, and/or its employees and/or directors may have positions in securities referenced herein, and may, as principal or agent, buy from or sell to clients.

Click to expand the overlay settings.

A variety of pre-set overlays are available, any of which you can enable or disable for a chart by clicking the box next to the item. The selected Overlays display at the top of the Overlay panel.

Bollinger Bands - The top and bottom lines are placed n-standard deviations above and below the calculated simple moving average. Since standard deviations are a measure of volatility, the bands widen during volatile price action and contract when the trading range tightens. You can change the variables used in the calculation from the defaults of 20 periods (based on Frequency) and n=2 standard deviations above and below.
Moving Average Envelope (MAE)- Employing an Envelope is similar to Bollinger Bands, except equidistant from the center average, in that the Envelope helps define the upper and lower boundaries of a security's normal trading range. When the security reaches the upper band, this may indicate a sell opportunity, whereas the security reaching the lower band may indicate a buy opportunity. Default of 21 periods with Upper and Lower % default of 3 can be changed.
Parabolic SAR (SAR) - Typically used in a trending market to identify exit points, Parabolic SAR calculates parabolic curves based on a security’s price movement. Default acceleration factor is 0.02 with a limit of 0.20.
Interpretation: When the SAR is below the price, this is typically taken as a bullish indicator, and when price is below the SAR, it is seen as a bearish indicator. Often, the point at which the SAR crosses above the price is where someone using the SAR to identify exit points would close a long position, and the point at which the SAR crosses below the price line is where one might close a short position. For more information, read Welles Wilder’s book New Concepts in Technical Trading Systems.
Moving Averages - Choose up to four Simple or Exponential Moving Averages with customizable periods.

Simple Moving Average (SMA)- The average of the last n-periods close values including current day. If current trading session hasn't closed yet, the last sale price is used. The default of 20 or 50 periods can be changed.
Exponential Moving Average (EMA)- While similar to the SMA, the exponential moving average uses a "smoothing factor" to give more weight to recent prices, while allowing all prices in the window to influence the average. The default of 20 or 50 periods can be changed.

Symbols - Put a check next to the Symbol field and enter a stock symbol and press Enter to load it into the chart and show the percentage gain or loss for both symbols over the time period displayed.
Or choose from a range of indices, including DJI, S&P 500, S&P 100, NASDAQ, NYSE, AMEX, Russell 2000, and 30YR T-Bond.
Check Compare by Price to show both symbols with two separate price scales, the main price scale on the right and the overlay price scale on the left, as shown below.

Stock and/or option symbols and price and volume data shown here are for illustrative purposes only. Charles Schwab & Co., its parent or affiliates, and/or its employees and/or directors may have positions in securities referenced herein, and may, as principal or agent, buy from or sell to clients.