How to Read Stock Graphs in 6 Steps Easily

Have you known how to read stock graphs or charts? It is very important to know and all traders must master it. The reading aims to perceive the price changes, current trading price, historical highs, and lows.  Besides that, the graphs are useful to know the trading volume, dividends,  and other financial information of the company. 

By the way, that is the definition of the stock chart. People also interpret it as the table of set information on a particular company's stock. Do not worry if you do not master how to read a stock chart. Deep here!

10 Important Term that you should know in How to Read Stock Graphs

Before seeing how to read stock graphs, let’s see the following terms to know first:

1. 52-Week High and Low

how to read stock graphs and charts

It is the first important thing that you should know and understand. It is the key metric to look at the trajectory of stock typically for one year.  Unluckily, you cannot watch the previous day's trading price here.

Related: Best Robotics Penny Stocks to Watch and Invest in Now

2. Sign of Ticker Symbol
The ticker symbol is a symbol that similar to the company such as Microsoft and MSFT  (MSFT - Get Report). In the stock graphs and charts, it is useful to delineate the stock exchange. 

So be sure to look up the right company when searching for the tickers.

3. Dividend to pay out per Share
 Unluckily, not all companies pay out dividends while it gives typical benefits for them. Nevertheless, the stock chart will present the dividend per share or the annual dividend payment per share for investors.

4. A Dividend Yield
You will read the dividend yield on the graph to the percentage return on the dividend. The calculation comes from dividing the annual dividend by the current stock price.

5. Stock Price P/E Ratio
P/E ratio or price-to-earnings ratio becomes the key metric on how to read stock graphs. It exists in the current stock price dividing. It differs from the current stock price coming to earnings per share for four quarters.

6. Day High and Low

how to read stock graphs and charts

This term is to the stock that trades throughout the day, from market open to close. However, it may not be the open and close prices because those are separate figures.

Related: Penny Stocks On Robinhood Under $1

7. Open Price
It is the price of the stock that opens stock trading on any day.

8. Close Price of stock
It is vice versa of the open price when the close price is often more significant for most stocks. The price of the stock stops during normal trading hours but it can impact the stock price after-hours trading.

9. Prior Closing price
It is the term for the price of the stock closing the previous day (24 hours before).

10. Net Change
Lastly, there is a net change in the stock. The Net Change is a dollar value change from the prior close price before.

6 Tricks How to Read Stock Graphs in Some Minutes

In this post, there are 6 steps on how to read stock graphs or graphs that you must apply. You can start it to read from:

1. Identify The graph
Identifying the graph can look to the top left-hand corner of the chart. You will see the ticker designation or symbol by searching for the company online. Using charts online can be useful to update frequently or even in real-time.

2. Select your time window
how to read stock graphs or charts by selecting the time window is useful for daily, weekly, monthly, or yearly. Here is a different view of selecting the time window relying on where you are accessing the chart.  

You can look at the different timescales to help you with identifying longer and shorter-term trends. 

Besides that, you may see when the stock has formed "consolidations." By the way, the consolidations are periods of stable prices (very little movement).

how to read stock graphs and charts

As to remember that the price on any given day and look for consolidations in the days that follow.  However, they also form above or below the price in question. It turns out the consolidations can both above and below. 

The above consolidation signifies resistance to the price moving up. In spite of this, they show resistance to downward movement and are referred to as "support". 

On the other hand, the stock traders often use support levels to purchase a stock and anticipate a rebound in price. Usually, the traders use resistance levels as an indication that the stock price will decrease.

3. Summary key
See the summary key in numerical values that you can read quickly. Commonly, the amount of information included in the summary key will vary depending on the graph. 

At least, you get the information on the latest price and the price moving averages. Then, the graph may also tell you about the volumes traded.

4. Track the price
The graph itself consists of two sections as the larger upper section and the smaller lower section. The upper part tracks the changes in the price the stock has been traded at over the period. You will see a line, bars, or markers known as “candlesticks.”  

By the way, the prices are shown along the vertical Y-axis. The graph including some colors to mark the stock closing up on a particular day, the marker may be black. Vice versa, you may use the red color to mark the stock closed down. 

5. Record the stock volume that you trade
Look at the bottom section of the graph and see the information on the volume trading stocks. The volume can be an essential indicator, to determine the particular momentum in the market. 

You can see it in positive or negative such as the pricing of the trading volume that has color code. 

6. Pay attention to the moving average
For your information that the moving averages are a key tool in stock analysis. Meanwhile, the moving average is a calculation of a stock average price of a period. 

It constantly adjusts as time goes by. Even though, it is a lagging average to smooth out price fluctuations over a specific period.

By the way, how to read stock graphs is the same as reading the chart. Therefore, you do not need to worry until looking for the differences. 

Okay, perceive all points which emerge on this post because you will use them soon. Do you a beginner trader? There is a special tip to do for an investor like you. Wait for the next meeting and you can read it soon. Good luck!
Previous Post Next Post

Contact Form