How to read a stock chart

Candles, volume, time frames, and what to look for.

TL;DR

A stock chart shows price over time. Most charts use candlesticks (open, high, low, close per period) with volume bars below. Reading them well means understanding what the chart tells you AND what it doesn't.

The axes

Time runs left-to-right. Price runs bottom-to-top. The chart type (line, bar, candlestick, area) and time frame (1m, 5m, 1h, 1d, 1w) change what you see — but the underlying data is the same.

Candlestick anatomy

Each candle compresses four numbers into a shape.

→Body — open and close. Green = closed higher than opened. Red = closed lower.
→Wick (or shadow) — high and low for the period.
→Long body, no wicks — one-sided session, strong move.
→Small body, long wicks — indecision, both sides tested.

Volume

The bars at the bottom show how many shares traded each period. Use volume to confirm moves: a price breakout on huge volume is more convincing than one on light volume.

Worked example

Reading a daily AAPL chart

You open AAPL daily and see a green candle close at $228, after opening at $222.

1Open$222 (left edge of body)
2Close$228 (right edge of body)
3High$229.50 (top of upper wick)
4Low$221 (bottom of lower wick)
5Volume60M shares vs 50M average
6InterpretationSolid up day, but volume isn't exceptional — not a high-conviction breakout

Takeaway

Look at price AND volume together. Big moves without volume are weak signals.

Common mistakes

What to avoid

!Reading a candle as 'green = good, red = bad' instead of as open vs close
!Comparing patterns across wildly different time frames without adjusting expectations
!Ignoring volume — it's the second most important signal on the chart
!Drawing trendlines that ignore wicks — wicks ARE real price activity

Self-check

Test yourself

Q1What four prices does a candlestick show?+

Open, high, low, close (OHLC).

Q2Why does volume matter when interpreting a price move?+

It tells you how much participation backed the move — high volume = high conviction.

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