How to Read Stocks: Charts, Basics and What to Look For

Several analysts work cohesively to create accurate predictions for a stock’s future price. Below is an image that details the potential growth of Facebook’s stock. As you can see, these analysts were quite bullish on Facebook stock as of July 2021. This pattern typically indicates a fluctuation https://www.bigshotrading.info/ in which a stock performs a price drop twice in a short period and then loses significant value shortly after. It’s calculated by taking the most recent dividend payment per share and annualizing it. Investors can compare this yield to other stocks as well as the market as a whole.

One effective way to learn how to read stock charts is by watching real-time price action. That’s why it’s important to have a trading platform with great charting features. The candlestick chart uses the stock’s open, high, low, and close prices to chart trends. For candlestick charts, the open and close prices are the most important when determining if there was upward or downward momentum for the stock. Support – Let’s say we are looking at a company whose stock price has been increasing for some time. The stock has had so many up days that it hasn’t touched its 50 day moving average for well over three months.

Reading Stock Charts: The Basics

The dummies must first choose the chart type, period, and range. One may also see the grids on the screen, which one may set every line’s presentation as dense, solid, or dashed. Next, one may see legends where they view the information about the stocks or other assets, for which one may develop a chart where they can determine how much detail they want to display. Although all companies do not issue dividends, this should not interpret as not worth investing in how to read stock charts if any company does not issue dividends. Like some companies prefer to reinvest their earnings rather than give them back to the shareholder, such companies focus on growth. ShareholderA shareholder is an individual or an institution that owns one or more shares of stock in a public or a private corporation and, therefore, are the legal owners of the company. The ownership percentage depends on the number of shares they hold against the company’s total shares.

• This is important since price trends are often the reasons that stocks go up or down.
• Ticker symbol – The symbol used on the stock exchange to identify the stock of a company; for example, The Walt Disney Co.
• As a result, we have no reason to believe our customers perform better or worse than traders as a whole.
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• As you can see by the image, Apple started issuing quarterly dividends to its shareholders midway through 2012.
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These large purchase or sales is what moves stock prices higher and lower. Bar charts are particularly useful for analyzing trend reversals and monitoring how volatile some security is. If most of the vertical lines are very long, then that means that the stock value can fluctuate wildly throughout the day. Conversely, small vertical lines mean the stock is relatively stable over that period. Lauren in front of our camper van at Kluane National Park on our recent 2-month road trip through Canada. The point of your investments is to let you look at more stuff like this, and less at stock charts on computer screens. Technical stock charts will make you look like an expert, but they’re unlikely to actually make you a better investor.

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Since EMA graphs are more sensitive to nearby changes, the line follows the price action a bit more faithfully and reacts more quickly to changes. Candlestick charts have been used for centuries and were first developed in the 1700s by a Japanese man named Munehisa Honma. Honma reasoned that, in addition to supply and demand, the market’s behavior was influenced by human emotions. All reviews, research, news and assessments of any kind on The Tokenist are compiled using a strict editorial review process by our editorial team. Neither our writers nor our editors receive direct compensation of any kind to publish information on tokenist.com. Our company, Tokenist Media LLC, is community supported and may receive a small commission when you purchase products or services through links on our website. Click here for a full list of our partners and an in-depth explanation on how we get paid.