How to Read a Basic Stock Chart

A stock chart shows price over time. Price is on the vertical axis, time on the horizontal. You’ll see a line or marks connecting each period’s price. The simplest type is a line chart, which only plots the closing price for each day. A candlestick chart is more detailed. It displays four prices for every time period: Open (the price at the start), High (the highest price), Low (the lowest price), and Close (the price at the end). This is often referred to as OHLC.

Most charts also include volume. This shows the number of shares traded during each period, typically represented as a bar chart under the price chart. A price movement on unusually high volume is taken more seriously than the same move on low volume. Why? It reflects more buying or selling activity. A common overlay is the moving average. This line shows the average closing price over a set number of recent days, like 50-day or 200-day averages. It’s recalculated daily to smooth out short-term noise and highlight the underlying trend.