How to read a stock chart

A line chart connects the closing prices, one point per period. It is the clearest way to see direction over a long window and it discards everything that happened between the closes.

A candlestick shows four numbers for each period. The body spans the open and the close, and the wicks reach to the high and the low. A long body means the period ended far from where it started; long wicks with a small body mean the price travelled and came back.

The distinction matters most on days when the range is large. Two sessions that closed at the same price can be a quiet drift and a violent reversal, and only the candle can tell them apart.

The histogram under the price is the number of shares traded in each period. It measures participation rather than direction: a move on heavy volume involved many people, and the same move on light volume involved few.

Volume is most useful as a check on a move that looks decisive. A breakout on volume well above the recent average is a different event from the same breakout on a quiet afternoon, and volume that dries up during a trend describes a move running out of participants.

It is also the input VWAP is weighted by, which is why that line and the volume band belong on the same chart.

The charts here offer three axis modes and the choice changes the shape of the same data.

A linear axis gives equal vertical distance to equal dollar moves, which is the right default over short windows. A logarithmic axis gives equal distance to equal percentage moves, which is the right one over long ones: on a linear axis a share that went from $10 to $20 looks like a smaller event than the same share going from $200 to $220, and the first doubled while the second moved 10%.

The percentage mode rebases every series to zero at the left edge of the visible window, which is what makes two companies comparable on one chart. It also re-rebases as the window is panned, so the comparison is always from the left edge of what is on screen rather than from a fixed date.

The shortest ranges are built from intraday bars and the longer ones from daily closes, so changing the range changes what a single bar represents.

That matters for anything measured in periods. A 200-period moving average on a daily chart is the 200-day average everybody means by MA200; the same overlay on an intraday chart is 200 of those bars, which can be a couple of trading days. The labels on the toolbar say bar rather than day for that reason, and the tooltip spells it out on the ranges where it would otherwise mislead.

VWAP is offered only on the intraday ranges. It resets at each session open, so on daily bars every bar would be its own session and the line would collapse into something that looks like an indicator and says nothing.

The band under the chart carries events as well as volume, each with its own control: earnings dates, dividend payments, insider transactions and congressional disclosures.

They exist to answer the question a price chart raises constantly, which is what happened on that day. A gap with an earnings marker under it is a company that reported; the same gap with nothing under it is a question worth following up in the news panel.

Every control stays on screen whether or not the symbol has that data, disabled rather than hidden, so the toolbar does not change shape as data arrives.

Reading a long-run chart on a linear axis, where old percentage moves are compressed into invisibility.

Comparing two companies by their price lines rather than rebasing both to zero, which compares share prices instead of returns.

Treating an indicator label as its usual meaning on an intraday chart, where the periods are bars rather than days.

Reading a gap without checking for an event marker underneath it.

Assuming a price chart shows total return. It plots price, so dividends are not in the line.