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How to Start Investing
Key Points
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A stock chart simply shows the price of a stock and the volume (number of shares traded) over a period of time. The most common charts are daily and weekly.
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Stock charts are used by investors to pinpoint the best times to buy and sell a stock.
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Being able to read stock charts is a skill you can learn quickly, and it gives you a massive edge over investors who can’t.
Got 10 minutes? Then you can learn to read stock charts and give yourself a massive edge when you’re investing.
What is a stock chart?
A stock chart plots the price and number of shares traded (volume) in various periods, usually daily or weekly.
Often the daily or weekly points of prices and volume will appear as a series of vertical bars. Most popular stocks show an overall upward trend from left to right, while stocks out of favor with investors will show a downward trend.
How are stock charts used?
When a stock starts trading on the major exchanges, it becomes subject to the forces of supply and demand. The price of a stock rises when it becomes popular and in demand, and it falls when it loses favor with investors and more people want to sell than buy.
Indications of investors’ general attitude toward stocks can be seen in charts that plot a stock’s price and share volume. Learning to read stock charts has been likened to a doctor reading X-Rays when diagnosing a patient. Stock price and volume patterns can signal when a stock is at an optimum point to buy or sell.
Get more insight on how to read a stock chart.
What do all the lines mean?
Lines and Symbols Decoded
Try our interactive stock chart to see what everything on the stock chart represents.
Navigate through the callouts by clicking the side arrows or page index numbers below.
- Daily
- Weekly
Price
Price bars show daily/weekly changes in the stock's price. Vertical bars in the daily chart show the price range for that day and vertical bars in the weekly chart show the price range for that trading week. The small intersecting horizontal dash within the price bar indicates the current price or where a stock closed at the end of the day/week. The color of the price bar represents whether the stock closed up (blue) or down (red).
- Daily
- Weekly
Volume Bars
Vertical bars in the volume area indicate the volume (i.e., number of shares traded) that day/week. As with the price bars, the color of the volume bar represents whether the stock closed up in price (blue) or down (red) for that trading period.
- Daily
- Weekly
Moving Average Lines
The horizontal red line tracks the average share price over the last 50 days of trading. Below, in the volume area, the red line shows the average volume over the last 50 days.
- Daily
- Weekly
Relative Strength Line
This line compares the price movement of that particular stock to the price movement of the S&P 500 (which is often used to represent the overall market). If the line is trending up, the stock is outperforming the S&P 500. If the line is trending down, it tells you the stock is lagging the overall market.
- Daily
- Weekly
Daily / Weekly Charts
The weekly chart helps you see longer-term trends, while the daily chart helps you spot specific buy and sell signals. Using the daily and weekly charts together helps you distinguish between normal price changes and a true shift in trend. That will prove invaluable when it comes to both pinpointing the best time to buy — and deciding if it's time to sell or just sit tight.
- Daily
- Weekly
Knowing how to read and recognize stock chart patterns will help you decide what moves to make when trading.
Read more on How to start Investing
- Why Start Investing
- Types of Investments
- What is the Stock Market?
- How to Trade Stocks
- What Makes a Great Stock
- How to Read a Stock Chart
- Stock Market Myth vs Facts
- How to Get Started
More on Intro to Investing
Why Start Investing Now
If you’ve got money, you can make it work for you. Here’s the best part: you don’t need a lot to start, and getting an early start can make a massive difference.
Types of Investments
Where can you stash your money, aside from a shoebox under the mattress? These are the most common ways to invest and grow your funds.
What is the Stock Market?
Bulls, bears and big banks: It’s all part of the rich stew that is the stock market. Here’s an intro to how it works and the lingo to know.
How to Trade Stocks
Buy, sell or hold? Trading stocks is how you make money in the market, and we’ll show you how it’s done.
What Makes a Great Stock?
There’s an old saying: All stocks are bad unless they go up. We hit the books and found 5 things that the biggest stock market winners have in common.
How to Read a Stock Chart
Got 10 minutes? Then you can learn to read stock charts and give yourself a massive edge when you’re investing.
Stock Market: Myths vs. Facts
The stock market has more myths than ancient Greece. We’ll use research and facts to debunk the 6 most common ones.
How to Get Started
Now that you’ve learned about the stock market and trading, interested in trying it out? Here’s your guide to jumping in.
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