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How to Read a Stock Chart?

Last Updated :

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Blog Author :

Ankit Jain

Edited by :

Ashish Kumar Srivastav

Reviewed by :

Dheeraj Vaidya, CFA, FRM

Types of Stock Chart

The following are the basic types of stock charts: -

  1. Line Stock Charts: One of the basic charts gives the least information. The line is drawn using the closing price for each unit of time.
  2. High Low Close Bar Stock Charts: Each bar represents the trading period, with the price being high, low, and close represented.
  3. Open High Low Close Bar Stock Chart: This illustrates a complete bar chart that includes the open price and close price in the day’s trading.
  4. Japenese Candlestick Chart: It is widely used in Japan that gives an excellent insight into the current and future price movement.
  5. Volume At Price Stock Chart: This is the new development in the stock chart that shows the volume of trades at a specific price level.
  6. Equivolume Stock Charts: These charts provide the volume at a price differently.

Stock Charts Volume

Stock chart volume is the number of shares traded during a time. It is plotted as a histogram under a chart where volume represents the level of interest. If a stock is trading low in volume, there is low interest in the stock market and vice versa. It also describes the liquidity constraint in a stock. Low volume refers to illiquidity, and one can interpret high volume as stock possessing high liquidity. Swing traders use it.

Stock Chart: Resistance Levels

The resistance level in stock charts is the price from which there is no further rise. It is always about the current market price. It is a point on the chart where the traders will expect maximum supply for the stock. It is a technical analysis tool that market participants look at the time of the rising market. It is unlikely that the stock price will rise above the resistance level, consolidate, absorb all the supply, and then see a high decline.

Frequently Asked Questions (FAQs)

How to read a stock chart for beginners?

The beginners must read a stock chart following the mentioned steps:
One must recognize the chart type.
Choose a time window and note the summary key.
Record the prices, note the volume traded, and then view the moving averages. 

How to read a stock chart for dummies?

The dummies must first choose the chart type, period, and range. After that, one must select a color scheme for the chart. One may also see the grids on the screen, which one may set every line’s presentation as dense, solid, or dashed. Next, one may see legends where they view the information about the stocks or other assets, for which one may develop a chart where they can determine how much detail they want to display.

How to read a stock chart on Robinhood?

One may view the price line in the standard or advanced chart view. In addition, it displays how changeable the price was for the selected period. And the large swings up or down show a very volatile price. On the other hand, the small or constant changes apply a relatively stable price heading in one direction at the chosen period.

How do I read a stock chart?

Initially, it would be best to recognize the trendline and then identify the support or resistance lines. Next, you may see the dividend details and the stock split at the bottom of the chart if that ever happened. Then, you must consider and understand the historical trading volumes at the bottom of the chart in the form of small and vertical lines. It indicates a volume trend at which the stock is traded.