How to Read Stock Charts: Quick-Start Guide for Beginners

how to read stock charts

It shows how traders might determine support and resistance levels . The volume indicator is below the chart; two moving averages (10-day and 30-day) are drawn over the candles inside the chart. Note the crossover between the two moving averages, which may be a sign that momentum has shifted from bullish to bearish . In today’s financial world, the saying “knowledge is power” applies more to investors and traders than ever before. For example, it helps to know how to read Robinhood charts if you’ve put all your eggs in the Robinhood basket. Moreover, understanding a range of charts helps you see more aspects of the market that the average retail trader would not see.

  • Line charts can also include volume and moving averages along with closing prices.
  • First, know that stocks will take huge dives and also make huge climbs.
  • Here are definitions of the most common stock market terms you’ll find.
  • Next, you may see the dividend details and the stock split at the bottom of the chart if that ever happened.
  • Market cap – measures the company based on the number of outstanding shares multiplied by the current share price.
  • If we divide the final price ($1,718.03) by the initial price ($443.75), we find that gold is worth 3.87× as much at the end of this 40-year holding period.

They don’t go higher than the resistance level or lower than the support. Unlike the other terms we’ll go over, there are no support or resistance lines you can load onto a chart; you have to figure out what the levels are yourself. Look for the prices that the stock won’t go above or below recently. The moving average lines simply track the share price movement over a period of time. But they are absolutely crucial to understanding if a stock is being enthusiastically supported — or aggressively sold — by large investors.

Reading Trade Volumes

If you’re looking for extra support, consider turning to a platform like Stash that can automatically save or invest money for you. Expert market commentary delivered right to your inbox, for free. We believe that great financial tools shouldn’t break the bank. My StockCharts Membership is the best and most reasonable financial instrument I have ever owned. We’ve partnered with Tradier Brokerage to bring you unlimited, commission-free equities and options trading from within StockChartsACP, our Advanced Charting Platform.

In the Price chart, both the Candlestick and Open-High-Low-Close chart styles convey extra meaning when compared to a simple line chart. Instead of a single point (i.e. the closing price), the day’s activity is shown as a symbol, in which the day’s 4 how to read stock charts data points (i.e. the open, high, low and closing prices) are drawn. And rather than constantly looking at what the stock market has been doing over the last few days, months, or years, try reviewing its performance over multi-decade holding periods.

What Are the Different Graph Patterns?

It provides a graphical representation of a stock’s closing price movement over time. Line charts can be viewed over different time frames, such as one day, one month, six months, or one, five, and ten years. How to invest in stocks; no technical analysis required).

how to read stock charts

Just because a company does or doesn’t issue a dividend doesn’t mean it’s not worth investing in. A dividend is when the company decides to give a portion of its earnings back to its shareholders. If you own the stock, you get a small chunk of the profit.

Types of trading charts and how to analyze them

Note that TZOO broke out of a four month base in September which was its original foundation. Back in 2010, Fossil was a leader among its retail peers, not only for its great growth but also the appreciation of its stock price. The 350+ store retailer selling accessories and watches went on a massive run since its breakout in August 2010. First, I have a daily chart showing how Fossil’s setup developed over 3.5 months. And here is a weekly chart showing the original setup, breakout, and price action thereafter. The stock broke down and out of the channel on high volume. However, two days later on the volume three times greater than the average, the stock reversed back into the channel.

  • To be more technical, a channel is the combination of an existing trendline and an additional parallel line.
  • You do not have to take splits into account when reading stock charts produced by professional charting services or trading platforms.
  • The candlestick will show the high, low, open, and close prices on the day.
  • Notice that the beginning and ending prices for this interval, represented by the left and right dashes, are very close together.
  • On the other hand, the small or constant changes apply a relatively stable price heading in one direction at the chosen period.
  • The volume indicator is below the chart; two moving averages (10-day and 30-day) are drawn over the candles inside the chart.
  • Cliff Natural Resources shows persistent resistance at $32.50.

Leave a Reply

Your email address will not be published. Required fields are marked *