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Stock Charting Basics

by Jason Chavis
  • Overview

    Stock Charting Basics
    Stock Charting Basics
    Stock charting is one of the most reliable ways to make decisions about investments. Although, they are not a guaranteed example of how a stock's future performance will be, understanding the history of a stock can help determine its patterns. There are a number of basic fundamentals in stock charting that can help an investor with the various forms of investing such as day trading and swing trading.
  • Identification

    One of the fundamental things to understand about stock charting is identification. Each chart is labeled. It should provide you with information regarding the market on which the stock is being traded as well as the particular stock imaged in the chart.
  • Features

    The chart will also display a number that represents the last price of the stock. Next to this number will be a description of the chart stating whether it is a daily, weekly or monthly presentation. This is known as the "summary key."
  • Time Frame

    The X axis of the chart is the time period. This is usually defined at the bottom of the chart with the exact periods of time such as the months displayed in the graph.
  • Significance

    Moving averages are the lines that define the overall analysis of the stock chart. They show the rise and fall of the stock prices and guide the methods by which the investor is making his or her decision.
  • Considerations

    Understanding the overall volume of the chart is also imperative. This will help an investor understand the market momentum. For example, if each bar represents a week, the line going through the bar represents the average volume during that period. The taller the bar, the more volume being traded.

    References & Resources