What is a price chart?
A chart is a picture of price over time. There are three common ways to draw it.
A picture of price
A is a picture of what a price did over time.
- Left to right is time. The left side is the past. The right edge is right now.
- Up and down is price. Higher on the chart means a higher price.
So if the line climbs as it goes right, the price went up over time. If it slides down, the price went down.
Three ways to draw the same thing
1. . One dot for where price ended each day, joined by a line. Simple and clean, but it hides a lot. You can't see how high or low price went during the day.
2. . Each day is a little stick. The top of the stick is the highest price, the bottom is the lowest. A tiny tick on the left shows where the day started, a tick on the right shows where it ended.
3. Candlestick chart. Same information as the bar chart, but drawn as fat little blocks that are green when price went up and red when it went down. You can see who won each day in one glance.
Most traders use candlestick charts, and so will we. The next lesson shows exactly how one candle works.
Remember
- On a chart, time goes left to right and price goes up and down.
- Line charts are simple but hide the highs and lows.
- Candlestick charts show everything, with colors that make it easy to read.
Check yourself
1. On a chart, what does left to right show?
2. What does a line chart hide?
3. Which chart do most traders use?
Next lesson: What is a candlestick?
Money Tree School is education, not financial advice. Examples use made-up or historical numbers to show how things work; they are not recommendations to buy or sell anything. Markets can lose money.