Learning how to read a stock charts is important if you are going to trade stocks. They can seem a little overwhelming at first but once you get the hang of them it’s really easy to understand.
The first step is to familiarize yourself with the interface. When you open a stock chart for a specific company such as Google, a bunch of information is displayed on your screen. You will have the company name (Google), ticker (GOOGL), open, high, low and close. You will also have volume data, market capitalization, buy and sell data.
In this example, we will use the bar chart. The green and red vertical bars wandering across the graph represent the changes in stock price. Each vertical bar represents the highest and lowest prices of the stock.
A tall bar means the price was volatile while a short bar indicates price movement was less volatile. If the price was lower at the end of the interval than the beginning, the bar is red. It’s green if the stock price went up during that period.
At the bottom of the chart, you have the choice of changing the time interval. You can select a shorter or longer duration. If you select a one-day interval, the bar chart will represent the stock price range for the entire trading day.
What you need to know is that weekly charts display long term trends while intraday charts display price action within the day. You can have time frames all the way down to less than a minute or even tick charts for really fast price action.