Stock market chart

Stock market scares a lot of people and many people do not understand how the market works and why do the prices of stocks rise and fall so frequently. Stock market charts are another intimidating part of stock market. But the truth is stock market charts are useful for anybody who is linked to stock market.

A person can make decision about whether to buy or not buy the stock after reading stock market charts. A stock market chart shows a trend for a particular stock for a given period of time, which can be very helpful to the investors. These are graphical charts which give investor a picture of price fluctuations or volumes traded of a particular stock. Stock comparison charts are used for comparisons and they can help investors in making wise decisions.

For every stock listed at a stock exchange, there is a stock market chart. On stock charts, the Y axis shows prices or volumes and the X axis shows the time scales.

Types of stock market charts:

OHLC bar charts are the most common. OHLC stands for Opening price, Highest price, Lowest price and Closing price. The stock charts can be categorized into four types.

Line chart shows the closing price of a particular stock. Intra-day fluctuations are not depicted on this chart.

§  Bar chart depicts the high, low and closing prices of a stock. It is a very commonly used stock chart. The top and bottom of the vertical bar plotted on the graph represent the highest and lowest price. A horizontal bar cutting through the vertical bar depicts the closing price of the stock.

§  Volume charts are bar graphs which depict volume (Y-axis) against time (x axis).

§   Point and figure charts or P&F depict the price fluctuations regardless of time. .

§  Candlestick chart is a combination of line graph and a bar graph which shows the price fluctuations of a security, or derivative. The candlestick contains a body having vertical lines protruding out of it from the top and bottom. The body of the candle stick depicts the opening and closing process. The upper vertical line denotes highest price and lower line stands for lowest price.

Then there are equivolume charts which plot price on the y- axis and volume on the x- axis.  

For large cap companies or blue chip companies, stock market charts are available easily but the same cannot be said about penny stocks. Intra- day stock market charts depict a trend for one day and thus will show highest ad lowest trading points. For day traders, this information is very useful.

Reading a stock market chart:

Reading a stock chart is not very difficult and in some time, even a layman can understand stock market charts. By reading the charts and price history, one can see the price resistance or price support of that stock.  Anybody can have access to these stock market charts at numerous websites or financial news channels. As an investor, even you have an option to make your own stock chart with the help of stock chart tools that are available at many websites.