Beginner's guide
How to read stock charts
A stock chart is a record of what price did — not a forecast of what it will do. This guide walks you through reading one in six steps, using made-up example data.
Candlestick anatomy
Illustrative sample data — not real quotesExample: the first candle opened at $50, rose as high as $54, dipped to $49 and closed at $53 — a green candle with short wicks.
1. Check what the chart shows
Look at the timeframe (one candle per day, hour or minute), the price scale on the right, and the dates along the bottom. The same stock can look like it's rising on a daily chart and falling on a 5-minute chart.
2. Read each candlestick
Each candle shows four prices for its period: open, high, low and close. The thick body runs from open to close. Green (or hollow) means it closed higher than it opened; red means it closed lower. The thin wicks show the extremes. A long upper wick means buyers pushed price up but couldn't hold it.
Go deeper in the full lesson3. Identify the trend
An uptrend makes higher highs and higher lows; a downtrend makes lower highs and lower lows. If neither is true, the market is moving sideways in a range. Zoom out before deciding.
Go deeper in the full lesson4. Mark support and resistance
Support is a price area where declines have repeatedly stalled; resistance is where rallies have stalled. Treat them as zones, not exact lines — they break often.
Go deeper in the full lesson5. Look at volume
The bars under the chart show how many shares traded. A move on unusually high volume shows more participation than the same move on thin volume. Volume adds context; it doesn't prove direction.
Go deeper in the full lesson6. Add one or two indicators
A moving average smooths price to show the trend's direction. RSI (0–100) measures how strong recent moves have been; readings above 70 or below 30 are called overbought or oversold, but price can stay there a long time.
Go deeper in the full lessonCommon beginner mistakes
- Reading one candle in isolation instead of in context of the trend.
- Treating support and resistance as exact prices.
- Stacking many indicators that all say the same thing.
- Assuming a pattern guarantees the next move. Charts show probabilities at best, never certainty.