How Do You Read a Stock Chart?


Quick Answer

Investors can read stock charts by paying close attention to the displayed information and how it varies over time. Bar charts and candlestick charts are the two most common types of charts used in stock trading.

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Full Answer

On a bar chart, a variety of different colors and conventions let investors easily read information. The foot on the left of each bar represents the opening price, which is often colored blue. The line extending from the top of each bar to the bottom is its trading range, with the uppermost limit being the highest traded price and the lower representing the lowest. The close appears as a foot on the right side of the bar, often colored red. These bars are typically organized by day.

Investors can read a candlestick chart in a similar fashion, but the open and close appear as a large, filled-in area on these charts instead of as side feet. The thin lines that may extend beyond the open or close are the trading price highs and lows for each day of trading, and colors are often used to show if the stock increased in value, typically indicated by a green filled area. Decreases are commonly indicated by red candlesticks.

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