Types of Stock Charts

For beginners, a stock chart is an essential tool to start investing in equities. This chart keeps updating stock movements during trading hours, helping investors gauge the fluctuations instantly. However, it become difficult for a beginners to read stock charts if they don’t possess appropriate knowledge. For them, it would simply be a bunch of colorful lines.

If, however, you are a trained observer, these lines are powerful indications of a company’s performance. For most traders, it’s a crucial tool. There are several types of stock charts used to indicate stock movements. Before we try to understand each of them, it’s important to note that these charts, regardless of their type, share similar axes. The horizontal line or x-axis indicates time, while the vertical line or y-axis talks about price movements. Hence, each chart must be read from right to left.

The simplest amongst all stock charts is the line graph. Although it’s simple to read such a graph, it usually misses out many details. They would, for instance, indicate current price change, but wouldn’t mention anything about highs & lows, or open & close of a stock.

Renko Charts and Kagi Charts are usually referred by long term investors, as they display only significant changes in a stock. This is the only reason why these charts aren’t referred by most day traders.

Day traders usually prefer extracting information from Candlestick Charts and Bar Charts. These stock charts point out minute stock movements along with other information like open and close price, highs and lows, and so on. Candlestick chart, particularly, displays precise information in an uncluttered way.

Reading stock charts, however, would only inform you about current trends. If you want to become a successful investor and earn a substantial amount over time, you will have to learn how to ascertain future trends. Sure the market is on the rise now. But what if it goes down immediately after you buy? For beginners, I would suggest you take some specialized courses and focus on maximizing profits. There are several strategies to invest in stock market, but you have to choose the one that works for you.