How to Read a Basic Stock Chart

A stock chart, at its most basic, is simply a picture of price over time — price on the vertical axis, time on the horizontal axis, with a line or set of marks connecting each period's price together. The simplest version, a line chart, plots only the closing price for each day. A more detailed version, the candlestick chart, shows four prices for every single time period at once: the Open (price at the start), High (the highest price reached), Low (the lowest price reached), and Close (price at the end) — often called OHLC.

Most charts also show volume — the number of shares that actually traded during each period — typically as a bar chart underneath the price chart. A price move that happens on unusually high volume is generally considered more significant than the identical price move on low volume, since it reflects more total buying or selling activity actually backing that move. A common overlay is the moving average — a line showing the average closing price over a set number of recent days (50-day and 200-day are especially common), recalculated daily to smooth out short-term noise and make the underlying trend easier to see.