Delhi Trading Academy

How to read stock market charts: Beginner’s Guide

How to read a stock market chart as a beginner is a crucial question faced by many stock market investors. Stock market investing needs a technical analysis of the stock price and a fundamental study of the company.

So, if you wish to invest in the stock of a certain company, you should study the management team and analyze the financials and competitive landscape, which will aid you in knowing if the company may withstand economic volatility.

Technical analysis mainly includes reading stock marketing charts that will aid you in looking at how the stock price has reacted to changes in the market with time and understanding trends that may aid you in making informed decisions.

At Delhi Trading Academy, we know that stock market investing needs a careful stock price analysis and provide advanced chart options to aid you in reading stock market charts. When you study stock market trading at Delhi Trading Academy, you are given a basic stock chart, as shown below that includes:

How to read stock market charts: Beginner’s Guide

What Does the Stock Chart Include?

Few services make stock charts difficult to read, adding too many non-required details. Charts are simple and easy to read and feature all the important indicators you require to answer the questions mentioned above to know the story the chart is conveying. Our stock market charts are also color-coded to make it simple to spot weekly and daily moves and spot trends.

Let us take a look at the major aspects to look for in the stock market chart. The blog concentrates on the weekly and daily charts, but the same concepts apply to intraday or monthly stock market charts.

Moving average lines

The horizontal red line tracks the share price over the last ten weeks of trading and the last 50 days, which is the daily chart. The horizontal line tracks the average share cost of the last 40 weeks of trading.


Using a weekly or daily timeframe, the price section in the stock chart indicates the changes in the cost. A small intersecting horizontal dash within the price bar shows the current cost or where the stock was closed at the end of the week or day. The vertical bars in the price section chart indicate the share cost range for that week or day. The price bar shows a color that is red (down) or blue (closed up) for that day.

Relative strength line

The relative strength line compares the movement of the stock price that is used to represent the market. The relative strength line goes up, then the stock outperforms. If it is trending down, then the stock is lagging the market.

Volume Bars

Vertical bars indicate the volume, that is, the number of shares traded for that week or day. The color of the volume bar indicates whether the stock is down or closed up for that particular week or day. The red line indicates the average volume of the stock for the past ten weeks or the last 50 days.

Here are the types of the chart and how you should read it:

1. Bar chart

The bar chart helps to study chart price activity. Bar charts aid investors in studying the price range of each period. Bars might decrease or increase in size from one bar to the next or over a bar range. You may see how the bars expand and contract between the high and low volatility periods. When the market becomes volatile, the bars become large, and the cost swings further. As the market becomes quiet, then the stock prices contract into smaller bars.

The bar size fluctuation occurs due to the way the bar is constructed. The vertical height of the bar chart shows the range between the high and low stock price of the bar period. The price bar also shows the closing and opening prices with attached horizontal lines; the left line shows the open, and the right line indicates the close.

2. Reversals and breakout patterns

Within a stock chart, specific repeatable patterns that may offer clues to understanding where a trend starts and ends might appear. And it means that they also offer possible entry and exit signals for trades. For instance, investors might look for at least two confirming stairsteps in the opposite direction of the past trend.

If a stock falls down and then reverses before it is called an uptrend, you should look for confirmation in the chart pattern of at least one higher high than the first and one higher low than the lowest cost of the past trend.

There are several breakout patterns that offer useful entry and exit signals. Descending and ascending triangles, pennants, and bullish and bearish flags are common patterns investors use to buy and sell points.

3. Candlestick chart

The Candlestick chart is different as compared to the bar chart. Candles aid in seeing bearish or bullish sentiment by showing distinctive bodies that are red or green based on whether the stock closes lower or higher than the open. The body shows the range between the closing and opening costs of the time intervals; the low and high costs are called the shadow or the wick.

Candles aid in analyzing or studying how costs move in a trending market. In a normal bull market, there may be more clusters of green candles compared to red candles, while the reverse is real for a bear market. Specific candle combinations create patterns that investors might use as entry or exit points.

4. Line chart

The most basic chart is the line chart. The line chart plots a single line that connects all the closing stock prices for a specific time interval. It is best to follow, but the line chart might not tell traders much about everyday activity. It will aid investors in seeing trends quickly and visually comparing the closing cost from one period to the next. As several brokerages place the valuation of an account on the closing cost, this option has value when you track the performance or trend of a stock to the market without being too concerned about intraday fluctuations.


At Delhi Trading Academy, you will learn the best strategies on how to read charts once you choose them. Delhi Trading Academy offers the best stock trading courses in Gurgaon and you will surely won’t regret choosing them for stock market trading analysis and learning the basic to advanced concepts that every trader needs. So, start your investing journey by choosing Delhi Trading Academy!


The best operating hours of the stock market are from morning 9.15 to afternoon 3.30 on weekdays. But you may also trade after hours and place AMO (after-market orders) if you fail to sell or purchase during work hours.

A fresher or beginner trader may trade in unlisted stocks, but financial professionals recommend against them. Unlisted stocks are not with the market authority- the Securities and Exchange Board of India, so it is not safe to invest in them.

The portfolio must not be over-diversified as it does not provide any results, and it becomes hard to keep a check on all the stocks. Also, the portfolio must not be only concentrated in one or two stocks as a tremendous price fall of one stock may adversely impact the overall portfolio performance. Investors should have 8-10 stocks in the portfolio based on the investment amount.

It is based on whether the person is choosing the stock for long-term investment or trading. If the person is trading in stocks, then there is no requirement to spend ample of time on fundamentals. Individuals must read trends, patterns, and charts and get involved in the day-to-day market updates.

If the individual is investing for the long term, then more time should be devoted to studying the stocks. It is crucial to check the company fundamentals, financial statements, management, and competitors if the investment is more than a year’s time.

If the market is at a peak or high, then you should observe and study stocks. If the investors are ready to invest and find good stocks, then eliminate lump sum investment. It may decrease the chances of purchasing stocks at a high cost.

The small-cap market grows fast compared to blue-chip companies. There are many hidden gems in the small-cap market that are yet to be explored. Large-cap companies have already proved their reputation in the market.

The stock quality plays a crucial role than the company size. There are many large-cap companies that are constantly providing good returns to the shareholders. Investing in small caps is no doubt more profitable than large caps only if the future clients and fundamentals of the business look promising.

One may find all the details about the company that includes price to earnings ratio, financial records, dividend history, company size, revenue growth and more on the verified websites of reliable stock exchanges BSE and NSE. You may find the details on the website of the company.

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