It includes a 20-period MA drawn in red and superimposed over the price action, as well as blue dots from the parabolic SAR indicator that gives trading signals intended to reflect short-term accumulation and distribution activity in the stock. This example of a stock chart depicts the price of Apple Inc. A stock chart will often include technical indicators in a box below the price action as well as price action overlays like a moving average (MA) of the price taken over a certain number of days. The chart’s vertical or Y-axis shows the price level of the stock that increases when looking upward and decreases when looking downward. The chart’s horizontal or X-axis shows the dates of price observations in an order further from the present as you move your eyes left. At the same time, it can also include information such as volume and the company’s financial information. It’s generally drawn on a grid and provides detail on the current price and historical price changes.
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If you’re new to trading or investing, learning how to read a stock chart as part of technical analysis can provide a solid foundation for forecasting future price action even in turbulent times. Investors can also quickly peruse a chart to assess how a stock has performed over a specific period of time to understand better how the stock might perform in the future. Moreover, understanding a range of charts helps you see more aspects of the market that the average retail trader would not see.įor traders, knowing how to read stock charts and interpret their data opens up various intraday and swing trading opportunities. Understanding how to read stock charts is an important part of technical analysis and has become virtually essential for any risk-taker looking to achieve long-term success in the financial markets. For example, it helps to know how to read Robinhood charts if you’ve put all your eggs in the Robinhood basket. In today’s financial world, the saying “knowledge is power” applies more to investors and traders than ever before.
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