How to Read a Stock Chart

Last reviewed on 2026-04-27.

Every ticker page on this site puts a chart front and centre. The chart looks busy on a first visit, and the temptation is to either ignore it or treat it as a fortune-telling device. Neither extreme is useful. A chart is a compact summary of two things: how a price has moved, and how much trading happened while it was moving. Once those two ideas land, almost everything else on the screen — candles, timeframes, volume, gaps — falls into place.

What a price chart actually shows

Time runs along the horizontal axis. Price runs up the vertical axis. A single point on the line is the price of one share at one moment. A chart is the path that point has traced. That is the whole concept. Most of the complexity that follows is simply about how much detail to compress into each step on the time axis.

The simplest way to draw a chart is a line connecting closing prices. Useful for a quick glance, but it throws away most of the day. A bar or candlestick is denser: instead of one number per period, it records four — the price at the start of the period (the open), the highest price reached (the high), the lowest price reached (the low), and the price at the end (the close). The four together are abbreviated OHLC.

Candlesticks, in detail

A candlestick draws those four numbers as a rectangle with two thin sticks ("wicks" or "shadows") above and below it. The rectangle ("body") spans the open and the close. The wicks reach up to the high and down to the low. Colour shows the direction: a green or hollow body means the close was higher than the open (price went up over the period); a red or filled body means the close was lower than the open (price went down). The convention is consistent across the chart on every ticker page here.

Reading a candle, then, is a four-step glance:

• Where does the body start and end? That is the period's open-to-close range.
• How tall is the body? A long body means the period closed far from where it opened — strong directional move. A short body means the period went almost nowhere on a net basis, no matter what happened in between.
• How long are the wicks? A long upper wick means the price went up during the period but gave the gain back. A long lower wick means the opposite.
• What colour is it? Green up, red down. The colour says nothing about the absolute level — only about this single period.

Timeframes

The interval each candle represents is the chart's timeframe. On a daily chart, every candle is one trading day. On a 1-hour chart, every candle is one hour. On a weekly chart, every candle is a week. The chart on a ticker page can be switched between timeframes from one minute up to monthly.

The same stock looks completely different at different timeframes. A daily chart of a stock that has fallen for ten weeks may show ten or fifteen consecutive red candles. The same stock on a 5-minute chart on the most recent day will be a mix of green and red candles within a narrow range. Neither chart is "more true." They show different time horizons and answer different questions.

A simple rule of thumb: pick a timeframe that matches the question being asked. To see whether a long-term trend is intact, weeks or months. To see whether a stock is reacting to today's earnings release, minutes or hours. Most traps come from looking at a 5-minute chart and drawing conclusions about the next year, or staring at a 10-year chart and concluding the next hour will look like the last.

Volume

Below the price chart, most platforms — including the embedded chart on this site — show a row of vertical bars. That is volume: the number of shares that changed hands during the period. Bigger bar, more shares traded.

Volume is the chart's reality check. A 5% rally on a quiet, low-volume day is barely a rally; a 5% rally on the heaviest volume of the year is a different event entirely. The principle, well-known to traders, is that price moves with conviction tend to come on heavy volume, and price moves on quiet volume often reverse. It is not a guarantee — nothing on a chart is — but volume is the difference between watching the price and watching the market actually act on it.

A single sharp volume spike is also a flag in itself. It usually means news has crossed the wire — earnings, an upgrade or downgrade, a regulator decision, a deal — and is worth pairing with the news feed on the same ticker page.

Gaps

A gap is a visible empty space on the chart between two periods. The previous period closed at one price; the next opened somewhere else, with no trades in between. Most gaps happen overnight — markets close, something happens after hours (an earnings release is the classic case), and the next session opens above or below the prior close.

Gaps come in three flavours that traders informally distinguish:

• Common gaps in quiet, sideways action — they tend to fill (price moves back into the gap) within a few sessions.
• Breakaway gaps at the start of a new trend, often after consolidation — they tend not to fill quickly.
• Exhaustion gaps at the end of an extended move — a final spike that reverses, often filled within days or weeks.

Sorting them in real time is harder than the labels suggest. The category often only becomes obvious in hindsight.

Indicators on top of the chart

The chart toolbar exposes more than eighty technical indicators. The most common ones — moving averages, RSI, MACD, Bollinger Bands — are explained in the indicators primer. A reader new to charts is generally better off with one or two indicators at most. Five or six on the same chart usually obscures more than it reveals.

Common mistakes

Three patterns tend to mislead readers learning to read charts.

• Chasing patterns that aren't there. Random data produces lots of head-and-shoulders, double tops, and other named shapes. Most named patterns are descriptive — they did happen — rather than predictive — they will happen again.
• Confusing absolute price with importance. A 1% move on a 500-dollar stock is the same as a 1% move on a 5-dollar stock. The chart's vertical scale exaggerates whichever stock has the bigger absolute number. Percentage scales (sometimes called "log") help when comparing.
• Reading too far in. A chart shows what has already happened. Future price depends on news, earnings, macro and a long list of things the chart cannot see. The chart is a record, not a prediction.

What charts cannot tell you

A chart will not tell a reader whether a business is profitable, whether its margins are improving, how much debt it carries, or whether its industry is growing. For those answers, the fundamentals primer is the better starting point. The chart and the fundamentals are complementary readings — most experienced investors look at both, in that order or the reverse, depending on temperament.

For the practical workflow of moving from a market overview to a specific stock, the markets page shows the broader picture, the screener narrows the universe by criteria, and the per-ticker dashboard combines the chart with profile, fundamentals, technicals and news in a single view.

Charts on this site are rendered through a TradingView widget and are for general information only. Nothing on this page is investment advice — see the disclaimer for the full position.