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Histogram 1815060

WHAT IS A HISTOGRAM?

A histogram is a graphical representation that organizes a group of data points into

user-specified ranges. Similar in appearance to a bar graph, the histogram
condenses a data series into an easily interpreted visual by taking many data points
and grouping them into logical ranges or bins.

KEY TAKEAWAYS

 A histogram is a bar graph-like representation of data that buckets a range of

outcomes into columns along the x-axis.
 The y-axis represents the number count or percentage of occurrences in the
data for each column and can be used to visualize data distributions.
 In trading, the MACD histogram is used by technical analysts to indicate
changes in momentum.

HOW HISTOGRAMS WORK

Histograms are commonly used in statistics to demonstrate how many of a certain

type of variable occurs within a specific range. For example, a census focused on
the demography of a country may use a histogram to show how many people are
between the ages of 0 - 10, 11 - 20, 21 - 30, 31 - 40, 41 - 50, etc. This histogram
would look similar to the example below.

Histograms can be customized in several ways by the analyst. The first is to change
the interval between buckets. In the above example, there are 5 buckets with an
interval of ten. This could be changed, for example, to 10 buckets with an interval
of 5 instead.

The other consideration is how to define the y-axis. The most basic label is to use
the frequency of occurrences observed in the data, but one could also use
percentage of total or density instead.
HISTOGRAM CHARACTERISTICS

Generally, a histogram will have bars of equal width, although this is not the case
when class intervals vary in size. Choosing the appropriate width of the bars for a
histogram is very important. As you can see in the example above, the histogram
consists simply of a set of vertical bars. Values of the variable being studied are
measured on an arithmetic scale along the horizontal x-axis. The bars are of equal
width and correspond to the equal class intervals, while the height of each bar
corresponds to the frequency of the class it represents.

The histogram is used for variables whose values are numerical and measured on
an interval scale. It is generally used when dealing with large data sets (greater
than 100 observations). A histogram can also help detect any unusual observations
(outliers) or any gaps in the data.

HISTOGRAM EXAMPLE: