Finder makes money from featured partners, but editorial opinions are our own. Advertiser disclosure

How to read a stock chart: a beginner’s guide

Learn to interpret data-rich stock charts to execute informed trades.

A stock chart is a visual representation of a stock’s price over time, and many traders and investors rely on stock charts to perform technical analysis as a part of their trading strategy.

By learning how to read a stock chart, you can gain insight into a stock price’s seasonality, volatility, trading volume and other historical information to find patterns that may indicate shifting trends and potential trade opportunities.

What is technical analysis?

Technical analysis is a trading and investing technique used to evaluate securities and identify trading opportunities by examining past price movements, volume and other trading indicators, usually via a stock chart.

3 types of stock charts

Different platforms use different stock charts, but the three main types of stock charts are line charts, bar charts and candlestick charts.

Here’s a breakdown of what each looks like and what they display.

  • Line charts. A line chart is the most basic type of chart and uses points connected by different line segments to show changes in a security’s value. Line charts depict only the closing values of a stock during a particular trading day. While advanced trading platforms offer line charts as an option, many beginner-friendly brokers, such as SoFi Invest, only use line charts.
  • Bar charts. Bar charts visualize the open, high, low and close price of an asset over time using a vertical line with two horizontal dashes. Bar charts are found mostly on advanced trading platforms.
  • Candlestick charts. Resembling candles, these charts display the open, high, low and close values for each period. Candlestick charts show price movements via two different colors, such as black and white or green and red. Candlestick charts are common on advanced trading platforms.

How to read a line chart

The basic line chart lets you quickly visualize an asset’s price history. Key information you’ll typically find on a line chart includes:

  • Time intervals. Explore price performance at different time scales, from one day to several years, providing both a zoomed-in and zoomed-out picture of a stock’s performance.
  • Live price. View the current trading price of a stock, allowing a real-time look into its performance.
  • Price gain/loss. Line charts typically include price changes as dollar amounts and percentages, which show a stock’s gain or loss over a certain period.

line chart image

How to read a bar chart

Here are some helpful elements you should know about a bar chart:

  • Color. The different colors show the relationship between the open and close prices. For instance, a bar color is black or green if the closing price is higher than the opening price. If the color is red, the closing price is lower than the opening price.
  • Vertical line. The bottom end of the line indicates the low price, and the top of the line indicates the high price.
  • Horizontal lines. The left-side dash shows the open price, and the right-side dash shows the close price.

Bar chart screenshot

How to read a candlestick chart

At first glance, candlestick charts may be a bit more confusing for first-time investors to read. However, here are their most important features.

  • Candlesticks. Each candlestick shows price movements over a particular period.
  • Candlestick body. The candle body shows the open and close prices. A filled black or red body means the security closed at a lower price than it opened. On the other side, a green or white body means the security closed at a higher price than it opened.
  • Candlestick wicks. The candle wicks show the high and low prices for the period. The upper wick extends to the high of the period, while the lower wick shows the low of the period.
  • Candlestick chart colors. The default colors for candlestick charts are green and red, though you may be able to assign any color depending on the customization of the trading platform.

candlestick chart

Important features of a stock market chart

If you’re new to buying and selling stocks, here’s a list of helpful terminology you may come across and what each means.

  • Time intervals. Time intervals refer to the selected period of the chart and can range from one minute to several years.
  • Opening and closing prices. The opening price is the price of a stock at the start of the trading day, while the closing price is the price of a stock when the market closes.
  • High and low prices. These refer to the highest and lowest prices during a trading period.
  • Bar or candlestick color. These refer to the green or white you may see on either chart when the price movements increase or the red or black when the prices decrease.
  • Trading volume. This indicates the number of shares purchased or sold in a given period.
  • Drawings. These refer to tools you can use, such as trend lines, shapes and annotations, to help you discover patterns and trends in the market.
  • Studies. A study refers to technical analysis such as moving averages, relative strength index and other techniques to help make trading decisions.

Support and resistance is a term used in the technical analysis of stocks. It’s a level where supply and demand meet and can temporarily stop a stock from rising or falling in price.

  • Support. Support is when demand prevents a stock from falling any further in price.
  • Resistance. Resistance is when the supply is enough to prevent a stock from rising in price.

Support and resistance chart screnshot

Basic stock chart patterns

There are many stock patterns to look out for when reading charts, but here are the most popular.

  • Ascending triangle. A bullish pattern illustrated by drawing a line at the end of resistance points and an ascending trendline along the support points. This means buyers are more active than sellers at this time.
  • Descending triangle. A bearish pattern illustrated by drawing a horizontal line at support points and a descending trendline at the resistance points. This means that sellers are more active than buyers at this time.
  • Symmetrical triangle. This pattern is typically a continuation pattern formed by two converging trend lines.
  • Pennant. A continuation pattern after an uptrend or downtrend illustrated by a small symmetrical triangle.
  • Flag. A bullish or bearish continuation pattern that looks like a flag on a flagpole and is usually preceded by a sharp rise or sharp fall in price.
  • Wedge. A bearish or bullish pattern that moves between converging trend lines. It’s bearish if the wedge appears to rise and bullish if the wedge appears to fall.
  • Double top and double bottom. Double tops and double bottoms are reversal patterns that have “M” and “W” shapes, respectively. A double top is bearish, whereas a double bottom is bullish.
  • Rounding top and rounding bottom. The rounding top is a bearish reversal pattern with an upside-down “U” shape where a stock rises in price but gradually reverses. The rounding bottom is a bullish “U” shape pattern where a stock falls in price but gradually reverses.
  • Head and shoulders. A bearish reversal pattern that consists of three peaks and two troughs, resembling a head and shoulders.
  • Cup and handle. A bullish continuation pattern that occurs when a stock price falls, rises, forming a cup, then falls once more before regaining its balance, forming the handle.
  • Gaps. Gaps are when the price of a stock suddenly rises sharply up or down. This is usually a result of some time-sensitive news release prompting sudden action by investors. These can be bearish or bullish, depending on the situation.
  • Golden crosses and death crosses. A golden cross happens when a short-term moving average rises above a long-term moving average and signals a long-term bull market. A death cross is when a short-term moving average drops below a long-term moving average and signals a long-term bear market may be ahead.

Basic stock chart terms

There are several terms worth learning before you dive into how to read a stock chart:

TermDefinition
OpenThe opening price of the stock during a given period
HighThe highest price of the stock during a given period
LowThe lowest price of the stock during a given period
Previous closeThe last price the stock traded for at the end of the previous day
Market capThe total value of all the company’s stock; calculated as stock price multiplied by number of outstanding shares
PE ratioPrice to earnings ratio; an evaluation metric calculated as stock price per share divided by earnings per share
Dividend yieldHow much a company pays in dividends relative to its stock price; calculated as dividend divided by stock price
52-week highThe highest price the stock traded for in the past year
52-week lowThe lowest price the stock traded for in the past year

Advanced stock chart terms

More complex stock charts may include some or all of the following terms:

TermDefinition
Bid and askThe bid price is what buyers are willing to pay. The ask price is what sellers are willing to sell the stock for.
VolumeHow many shares of a given stock have traded in a given period.
Average volumeA measurement of how much a given stock has traded over a specified period
Day’s rangeThe difference between the high and low prices of the day
BetaThe measurement of a stock’s volatility compared to the overall market. Riskier, more volatile stocks have a beta greater than 1.0. Safer, lower volatility stocks have a beta of less than 1.0. This isn’t found on a stock chart, but it’s important information to seek out.
Earnings per shareA calculation of the net income earned for each share of stock.
Earnings dateThe next date the company publicly reports earnings.
Ex-dividend dateA record-keeping date to determine which shareholders receive dividends.
1-year target estimateAn analyst’s prediction of what the stock’s price will be in one year. This prediction won’t be featured on a stock chart, but you can find it near the stock chart.
1 - 6 of 6
Name Product Ratings Available asset types Minimum deposit Stock trade fee Cash sweep APY Signup bonus
SoFi Invest®
Finder Score: 4.1 / 5: ★★★★★
SoFi Invest®
★★★★★
Stocks, Mutual funds, ETFs, Alternatives
$0
$0
Get up to $1,000 in stock
when you fund a new Active Invest account
Tastytrade
Finder Score: 4.6 / 5: ★★★★★
Tastytrade
★★★★★
Stocks, Options, ETFs, Cryptocurrency, Futures, Treasury Bills
$0
$0
N/A
Get $100-$5,000
when you open and fund an account with $5,000 to $1,000,000+
Highly commended for Best Derivatives Trading Platform award.
Public.com
Finder Score: 4.1 / 5: ★★★★★
Public.com
★★★★★
Stocks, ETFs, Cryptocurrency, Art, Treasury Bills, Collectibles
$0
$0
5.1%
N/A
2.5% fee applies to all alternative asset transactions.
Robinhood Gold
Finder Score: 4.3 / 5: ★★★★★
Robinhood Gold
★★★★★
Stocks, Options, ETFs, Cryptocurrency
$0
$0
5%
Get a free stock
when you successfully sign up and link your bank account.
Try Robinhood Gold for 30 days risk-free upon signup and earn a 5% APY on your uninvested cash, a 3% match on IRA contributions, up to $50,000 in instant deposits and more. Accounts are auto-downgraded after the trial period.
Moomoo
Finder Score: 4.7 / 5: ★★★★★
Exclusive
Moomoo
★★★★★
Stocks, Options, ETFs
$0
$0
5.10%
Choose a 1.5% match or 7 free fractional shares
when you open a new account and meet funding requirements
No commission stock and ETF trading, with a chance to get a 1.5% cash reward match or 7 free fractional shares.
Robinhood
Finder Score: 4.3 / 5: ★★★★★
Robinhood
★★★★★
Stocks, Options, ETFs, Cryptocurrency
$0
$0
1.5%, or 5% with Robinhood Gold
Get a free stock
when you successfully sign up and link your bank account.
Try Robinhood Gold for 30 days risk-free upon signup and earn a 5% APY on your uninvested cash, a 3% match on IRA contributions, up to $50,000 in instant deposits and more. Accounts are auto-downgraded after the trial period.
loading

Bottom line

Reading stock charts and using technical analysis can be a useful tool for traders and investors to assess the stock market and find possible trading opportunities.

If you’re interested in getting started leveraging stock charts as a part of your trading strategy, explore the best trading platforms for beginners to find the broker and trading tools that are right for you. While some stock charts, such as line charts, are easier to read than charts such as candlestick charts, you can build your skills with practice.

Frequently asked questions

More guides on Finder

Ask a Question

Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and finder.com Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Go to site