Short answer: A stock chart is a picture of how a share’s price, or the number of shares traded, has changed over time. Time runs along the horizontal axis, while price or volume runs up the vertical axis, so you can read a stock’s history from left to right. Three common formats, line, bar and candlestick, show the same history with different levels of detail.
Last reviewed: 7 November 2026
At a glance
| Chart element | What it shows for each period | Main catch |
|---|---|---|
| Line chart | Closing price only | Hides the high and low reached during the period |
| Bar chart | Open, high, low and close | Small ticks are harder to read when many periods are shown |
| Candlestick | Open, high, low and close | Colours can be customised, so check the legend first |
| Trading volume | Number of shares bought and sold | Shows activity, not direction |
How does a line chart work?
A line chart is built by plotting each day’s closing price, the last price at which the share traded in that period, as a dot, then joining the dots. Because it uses only one price point per period, it leaves out what happened in between. A stock can rise sharply during a day and still close near where it opened, and a line chart will look the same as a day when nothing much happened.
How do you read a bar chart?
A bar chart draws each period as a vertical bar with two small side ticks. The top of the bar marks the day’s high, the highest price reached, and the bottom marks the low, the lowest price reached. The left tick marks the open, the first price of the period, and the right tick marks the close, the last price.
Consider a hypothetical share, invented here purely for illustration. It opens at ₹500, reaches a high of ₹520, falls to a low of ₹490 and closes at ₹510. Its bar would run from ₹490 at the bottom to ₹520 at the top, a span of ₹30. The left tick would sit at ₹500 and the right tick at ₹510.
How do you read a candlestick?
A candlestick shows the same four prices, open, high, low and close, for a period. The rectangular body spans the open and close, and the thin lines above and below it, called wicks or shadows, reach the high and low. Using the same invented share, the body runs from ₹500 to ₹510, so it is ₹10 tall, while the wicks reach ₹520 and ₹490.
The body is one third of the full ₹30 span in this example. A candle with a short body and long wicks shows that prices moved widely within the period but finished near where they started. The candle alone does not reveal why the price moved.
Do candle colours carry a meaning?
Candle colours are a display convention, not a measurement. Green or white usually indicates a period in which the price rose, and red or black usually indicates a period in which it fell. Charting software lets users change these colours, so the legend, or key, on any chart is worth checking before you read it.
How do you spot an uptrend or a downtrend?
An uptrend is marked by successively higher highs and higher lows, while a downtrend is marked by lower highs and lower lows. In other words, a trend is the direction in which the peaks and troughs of the chart move over several periods. One period on its own does not establish a trend.
A trend identified on a chart describes past prices. It does not tell you whether the next high will be higher or the next low will be lower. Two people looking at the same chart can also draw different trend lines, which is why the reading always involves some judgment.
What does trading volume add?
Trading volume is the number of shares bought and sold in a period, and it is usually shown as bars along the bottom of the chart. High volume during a price move suggests the trend has strong conviction behind it, meaning many participants were trading in that direction.
Suppose, again for illustration only, that the hypothetical share rises from ₹500 to ₹510 on 2,00,000 shares traded, compared with 20,000 shares on an ordinary day. The larger volume would suggest more activity behind the move. Volume does not show direction on its own, though. A day with heavy volume can be a day of falling prices.
What are the limits of reading charts?
Charts are built from past prices and volumes, so they describe what has already happened. Interpreting them involves judgment, and the same chart can support different readings. A line chart can look smooth even when a stock’s intraday range was wide, which is why it helps to look at the other formats too.
Charts are also one tool among many. A pattern that appeared in earlier periods does not guarantee that it will appear again, and the risk of loss in any share remains whatever the chart looks like. Understanding what each element measures is the useful part, not predicting the next move.
Frequently asked questions
Is a line chart enough to understand a stock’s movement?
A line chart shows only the closing price of each period, so it cannot show the high or low reached during that time. Bar and candlestick charts display those extra points.
Do green candles always mean a stock went up?
Green or white usually indicates a period in which the price rose, but colours are only a display convention. They can be customised in charting software, so the legend should be checked.
Does high volume confirm that a trend will continue?
High volume during a move suggests the trend has strong conviction behind it. Volume describes past activity and does not predict what the price will do next.
Sources and last check
Facts in this article were checked against the sources below on 7 November 2026. Rules and figures can change; check the primary source before acting.
- kotakneo.com (broker education)
- upstox.com (broker education)
- zerodha.com (broker education)
This article is general information, not investment advice. MyFinanceBandhu is not a SEBI-registered investment adviser.