Fundamentals of Charts
Charts are visual representations of the historical price movements of a particular stock or security over a specified period of time. They display green & red candles, representing the opening price, closing price, high, and low prices of the stock for each time interval (such as minutes, hours, days, weeks, months, or years) along with other relevant data.
Note: Past chart performances as well as chart patterns, candlestick patterns, and other strategies illustrated on our website may show the history of the investment associated with those performances, but is not necessarily indicative of future investing results.
What does the chart provide?
Candles have different lengths, which indicate price movement (more in our candlestick blog). The numbers on the right indicate the stock price along with the stock performance.
Moving Average: The blue line is a 21-day moving average that we added to watch Tesla’s average performance over the last 21 days. Traders also add 50-day and 200-day moving averages to their charts to see how the market develops over time.
Purchase Volume: The red and green bars on the bottom of the screen indicate purchase volume. Higher bars indicate more volume and therefore more liquidity in the stock. A red volume bar indicates that the close price for the period was lower than the open price. A green volume bar indicates that the close price exceeded the open price.
Earnings: That little house on the bottom of the chart with the E in it stands for earnings. If green, expectations made by analysts have been met. If red, earnings haven’t met expectations. In the U.S. earnings are reported quarterly (four times a year) and provide solid grounds for a company’s current situation and future expectations.
The purple lightning symbol, also on the bottom of the chart, indicates that there are new headlines or news about the company. Depending on which network you use to look at charts, those indicators may look different.
Indicators: Traders use different indicators to analyze a chart. Some use hardly any because it may irritate them. So, it depends on the trader, their experience, and obviously their strategy to make a profit in the market. However, the majority of traders we know, including ourselves, work with volume, support and resistance levels, moving averages, and study current news. That doesn’t mean that this strategy works for everyone.
Note: We get all our charts from TradingView. It’s a network where you can find many different investment vehicles and their charts, indicators, tools, and other financial instruments. We don’t have a paid agreement with TradingView that would potentially bias our opinion, so this is truly what we believe is a great resource (regardless of prior trading experience).
Disclaimer: This content is for informational purposes only and is not intended as financial advice. We try to provide accurate information on personal finance and investing, but it may not apply directly to your individual situation. We are not financial advisors and we recommend you consult with a financial professional before making any serious financial decisions. There are risks associated with any investment which include but are not limited to stocks, bonds, currencies, cryptocurrencies, as well as any other market or investment vehicle. For more Terms, click here.