How to Read the Three Types of Stock Charts

To read price charts stock traders will need to first of all learn trading analysis.

This technical analysis study of price movement will analyze historical price moves using trends and patterns in an attempt to predict the next likely movement of the price direction.

A chart can be described as a graph representation of the price of a instrument over a specified chart time-frame period.

The charts use the y-axis or vertical axis to represent the price scale and the x-axis or horizontal axis to represent time scale. Prices are then drawn from left to right with the most recent price being plotted at the furthest point to the right of this chart.

The chart can have different chart time-frames

MetaTrader 4 Chart Time-frames

M1 for 1 Minute Charts

M5 for 5 Minute Charts

M15 for 15 Minute Charts

M30 for 30 Minute Charts

H1 for 1 Hour Charts

H4 for 4 Hours Stock Charts

D for Daily Stock Charts

W for Weekly Stock Charts

M for Monthly Stock Charts

MT5 Chart Time-frames

M1 for 1 Minute Charts

M2 for two Min Charts

M3 for 3 Minute Charts

MetaTrader for 4 Minute Charts

M5 for 5 Minute Charts

M10 for 10 Minute Charts

M12 for 12 Minute Charts

M15 for 15 Minute Charts

M20 for 20 Minute Charts

M30 for 30 Minute Charts

H1 for 1 Hour Charts

H2 for 2 Hours Stock Charts

H3 for 3 Hours Stock Charts

H4 for 4 Hours Stock Charts

H6 for 6 Hours Stock Charts

H8 for 8 Hours Stock Charts

H12 for 12 Hours Stock Charts

D for Daily Stock Charts

W for Weekly Stock Charts

M for Monthly Stock Charts

These chart timeframes are used to plot price data movement over the specified chart timeframe period and stock traders can then analyze price movements from these charts.

Using charts makes it easier for stock traders to analyze price movements because stock traders can analyze price trends as well as price patterns.

Price charts are used to analyze supply and demand for the market price movement. And changes in the supply & demand will be shown in the market price movement.

Technical analysis study is then used to analyze these price movements on the charts. Technical analysis assumes that all the market information has been factored in the price action movement based on supply and demand for a particular stock indices instrument and this supply and demand is depicted in the price action movement that occurs on the charts price movement.

The Three Stock Charts Types That are Used in Technical Analysis

The three chart types used for trading analysis are:

Line Stock Chart
Bar Stock Chart
Candlestick Chart

Stock Line Chart

Stock Indices line chart draws a continuous line from one closing price to the next closing price and this then depicts the movement of price of a specific stock indices instrument over a period of time on the chart.

Stock Indices line charts do not provide stock traders with a lot of details and information about price movement and the only information plotted by this line chart is of where the price closed for a specific time-frame period.

The line chart can be used to interpret trends based on the direction of the stock indices line chart movement.

Stock Indices Bar Chart

A bar chart is used to show the opening price, the high price, the low price & the closing price.

The bar chart will depict the whole price range for each period - using the above price information points - opening price, the high price, the low price and the closing price.

The vertical bar indicates the instrument trading range as a whole for the period

Tops of the bar indicates the high price

The bottom of the bar indicates the low price

A dash that's drawn to the left of the market price bar indicates the opening price

A dash that's drawn to the right of the market price bar indicates the closing price

Stock Candle Chart

A candlestick chart is used to show the opening price, the high price, the low price & the closing price.

A candle chart is represented in a easier to read and interpret format compared to the stock indices bar chart.

Candle charts represent the same data as that of a bar chart but in a much easier to analyze format.

Stock Candles have two parts: the body of the candle and the shadow of the candlestick

Candlesticks have a body which's the difference between the opening price & closing price. The body of the candle will have different colours depending on the direction of the market price.

Blue or Green Candles for when price moves up

Red Candles for when price moves down

The candlesticks also have protruding lines above & below the body of the candlestick - these protruding lines are known as shadows. The upper shadow represents the high price and the lower shadow represents the low price.

How to Read the Three Types of Stock Charts

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