Stock Charts: A Look in the Rear View Mirror
Price and Volume Chart - Apple Inc.
What are Stock Charts?
Stock charts graph changes in a stock's price over time. They are also the starting point for all technical analysis
The standard chart has price along the vertical axis (from bottom to top) and time (time period, chart range, etc.) along the horizontal axis (from left to right).
You have a few different options when it comes to the timeframe of your chart.
- Daily - "1 day", "2 days" , "5 days“, “10 days”
- Monthly - 1, 2, 3, 6, Year to Date (YTD)
- Yearly - 1, 2, 3, 4, 5, 10, All
The second selection you'll make (with regard to time) is the period of time you want to use to measure the price change.
If you select the "intraday" option, you can choose to see price changes in the following intervals:
- 1 minute
- 5 minute
- 15 minute
If you choose weekly, monthly, quarter, or yearly, you can display price changes per:
- Day (Daily)
- Week (Weekly)
- Month (Monthly)
- Quarter (Quarterly)
- Year (Yearly)
Most charts also include a smaller graph of trading volume, just below the price graph, with the number of shares along the vertical axis.
Why are Stock Charts important?
Stock charts are important because they show investors history of price changes.
As mentioned above, this is a key part of technical analysis. But many of the ratios used for fundamental analysis
are also calculated using the price of a stock (for example, the price to earnings ratio).
How to Use Stock Charts
You have several options when it comes to creating a stock chart. And by options, I mean websites. Your brokerage account will have a charting program.
If you don't feel like logging into your account, you can also visit financial websites such as MarketWatch, CNBC, CNN (more specifically CNN Money), Bloomberg.
There are also websites such as Finviz.com
(see the chart at the top of the page), BigCharts.com
, and stockcharts.com
Even the search engines made their own charting tools - Yahoo! Finance and Google Finance (for the record, Bing uses MSN Money).
After selection a type of investment, the main variable is time. You can look at price movements in seconds, minutes, hours, days, weeks, months, quarters, and even years.
You can plot prices several different ways:
- High-Low-Close (HLC)
- Open-High-Low-Close (OHLC)
- Bar Charts