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L.9 · BEGINNER · 2 MIN

Reading a Stock Chart

Stock charts show price and volume over time. Learning to read them helps you understand what has happened, even if they cannot reliably predict the future.

Quiz · 5 questions ↓

Price lines, candlesticks, volume, and averages

ElementWhat It Shows
Price lineClosing price each day, connected as a line
CandlestickOpen, high, low, close for each period
Volume barsNumber of shares traded (tall bars = high activity)
Moving averageSmoothed price trend (e.g., 50-day average)

Read the same chart at different time scales

Open any ticker chart. Switch between 1M, 1Y, and 5Y periods. Watch how the story changes at different time scales.

Reading a breakout confirmed by volume

A stock has ranged between $50-52 for 6 weeks. Tuesday it breaks above $52 on 3x average volume. Wednesday-Thursday it pulls back to $51.50 on low volume. Most disciplined read?

Why volume confirms a price move

Volume confirms price moves. A price rise on high volume is more meaningful than the same rise on low volume.

Check your understanding

Sit with the ideas.

A stock rises 8% on 5x its average daily volume. The next day it rises 2% on normal volume. What does this pattern suggest?

Why:
Continue this lesson in the appAdaptive practice · saves your progress · remediation when you miss

Other lessons in this course.

  1. 01What Is a Stock?
  2. 02How Stock Exchanges Work
  3. 03Sectors: How the Stock Market Is Organized
  4. 04Market Cap: Small, Mid, and Large
  5. 05Dilution: When Your Slice of the Company Shrinks
  6. 06What Moves Stock Prices?
  7. 07Dividends: Getting Paid to Own Stocks
  8. 08Bulls, Bears, and Market Cycles
  9. 09Reading a Stock Chart— reading now
  10. 10Order Books and Price-Time Priority
  11. 11Market, Limit, and Stop Orders -- and Slippage
  12. 12Short Selling, Locate, and Failure to Deliver
  13. 13Corporate Actions: Splits, Spin-Offs, DRIPs, and Dividends
  14. 14IPO Mechanics and Lockup Expiration
Continue this lesson in the app →See it on a real ticker →