Understanding the basics of stock market charts is not enough if you expect to be a good investor in the long run. Being a good investor in the long run requires a thorough knowledge of things like stock market charts and indeed you need to get to the point where reading a stock market chart is second nature to you. This is because sometimes decisions regarding the buying and selling of stock need to be made in the space of just a few seconds and you will not be able to make those decisions if you do not have the ability to instantly process the information that you are given. This article will help you get started on the path to being able to read stock market charts at an advanced level of comprehension.

Time Frame

The first thing that you need to consider when reading a stock market chart is the time frame that the stock chart covers. While you can deduce this by taking a look at the bottom section of the graph, that is not the best way to do things. In order to figure out exactly what you are looking at through that method, you would also need to count all the bars on the chart and then do some division in order to get the time interval of the graph. Rather, what you want to make sure that you do is take a look at the title of the graph or the details of the graph because both of those places will normally give you some indication of what each bar on the graph represents. A single bar on a stock market chart can represent anything from five minutes all the way up to a day or a week and that is why it is especially important for you to know what this bar representation is before you start doing your analysis.

OHLC Format

Most of the stock market charts that you use in the world today will be in OHLC format for the simple reason that OHLC format has been deemed by most to be the most useful format for a stock market chart. OHLC is also used in many of the other investment markets as well such as for commodities and Forex transactions. OHLC stands for Open, Hi, Low and Close and each of these corresponds to a specific stock value that was held during that particular time. This means that for each particular bar that you have on the stock market chart, you can get information about the opening price when that bar was initially created, the highest price reached during that bar, the lowest price reached during that bar and the last price that was available during the existence of that bar. Once again, this should indicate to you why it is important to know the time intervals of the bars on the stock market charts because interpreting wide OHLC movements would be quite different if the movements occurred over 5 minutes or 5 weeks.

Volume

The stock market chart has something that many of the other charts do not have and that is a volume indicator. For the most part, things like Forex transactions are not really limited because there is so much of each currency available in the world. However, for the stock market there are a finite number of shares available in each company and that is why a volume indicator is needed in some cases. This volume indicator will be wholly different and easily distinguishable from the other parts of the stock market bar. This will let you know in no uncertain terms what the volume of the stock is at that particular point in time.