Charting Stocks: The Why & How

The Main Types of Stock Charts

Charting is flexible in how you choose to use it. Some forms are very basic, others are genuinely advanced, and there is no single right answer. Here are the most common chart types you will meet, starting with the one almost every platform opens by default.

The first three below, the candlestick, the bar and the line, are drawn from the exact same Apple price data so you can see how one set of numbers can look completely different depending on how it is plotted.

1. Candlestick (Japanese Candlestick)

Candlesticks can be traced back as far as the 1700s, when Japanese rice merchants used them to track the price of rice futures. The method was popularized for Western traders in 1991 by Steven Nison in his now-classic book, Japanese Candlestick Charting Techniques, which still earns a spot on our roundup of the best trading books for traders. From there the candlestick became the normal default on nearly every platform and for nearly every trader.

Each candle displays the open, high, low and close for one unit of time. It is one of the most insightful chart types you can use, though it can feel overwhelming for beginners at first. We break the single candle down piece by piece further down the page.

2. Bar Chart (OHLC and HLC)

The bar chart carries the same information as a candle, drawn as a thin vertical line with a tick on each side. The OHLC bar shows the open (left tick), high and low (top and bottom of the line) and close (right tick), the complete action of the period. The simpler HLC bar drops the open tick and shows only the high, low and close. Traders who prefer a leaner, less blocky chart often reach for bars over candles.

3. Line Chart

The line chart is arguably the simplest of them all. It plots a single line through the closing price of each period, nothing else. You lose the open, high and low, but you gain a clean, uncluttered read on the overall direction of a stock. It is the perfect first chart to put in front of a brand-new trader before the candles come out.

4. Volume at Price (VAP)

Volume at Price is a newer chart type that shows the number of shares traded at each price level rather than volume over a span of time. That tells you where most of the trading actually happened, which is to say where buyers and sellers had the most interest. The longest bar, the Point of Control, marks the busiest price of all, and those heavy-volume shelves often turn into support and resistance down the road. It is a window into market psychology in both time and price. Not every charting platform offers it yet, so keep an eye out. To go deeper on where orders sit and how that interest shows up live, see our guide on how to read Level 1 and Level 2 data.

5. Point & Figure (P&F)

Point & figure is the odd one out: it does not plot a timeline at all. Instead it is built purely from price swings, a column of Xs while price is rising and a column of Os while it is falling. A new column only begins on a genuine reversal, so all the quiet, sideways noise simply disappears. It is easy to learn but can be time-consuming to maintain by hand, which is exactly why software does it for you now.

Anatomy of a Candle

Since the candlestick is the most popular and common chart type by a wide margin, it is worth slowing down and breaking one down completely. Once you can look at a single candle and instantly see what it is telling you, charting at a high level stops feeling like a foreign language.

Every candle is built from the same four prices, the open, the high, the low and the close, and the same is true of an OHLC bar. The diagram below shows those four points mapped onto both notations side by side, so you can see they are simply two ways of drawing the identical information.

The thick middle is the body, which runs from the open to the close. The thin lines poking out of the top and bottom are the wicks (also called shadows), marking the high and low of the period. Color tells you the rest at a glance: a bullish candle (often green) closed above where it opened, while a bearish candle (often red) closed below. Our branded cheat sheet sums it up in one image:

Where candlesticks came from is a fun bit of history, but the real lesson inside it matters more. Candlesticks were invented in Japan well over a century ago, before Western traders developed the bar and point-and-figure charts of their own. It started with a Japanese rice trader named Homma, who recognized that the supply and demand for rice was driven heavily by the emotions of the people trading it. To map that emotion visually, he used the method we now call candlestick charting. That is the lasting takeaway: trading emotion is real, and reading it on a chart helps you anticipate price movements. You can go much deeper on the individual formations in our dedicated Candlesticks Trading 101 guide.

Get Your Charts Set Up

Every trader views their charts a little differently. Some lean on multiple timeframes, others load up studies and indicators, and the right answer is whatever is comfortable for you. Believe it or not, you do not need fancy charts with a dozen indicators stacked on top of each other. A simple setup really does get the job done. As you settle in and your read on price improves, that is the time to start exploring new studies, not before.

Here are two clean starting points, one tuned for fast intraday work and one for higher-timeframe swing trading:

Do not let the acronyms intimidate you. Each of those tools earns its place, and we explain the most useful ones in plain language in our breakdown of the top 5 technical indicators, covering volume, moving averages, RSI, MACD and VWAP. Two are worth singling out here: the moving average and the VWAP.

Moving averages smooth price into a single trend line, and the first choice you face is simple versus exponential, which we settle in our SMA vs EMA guide (the deeper dive on the exponential side lives in our EMA guide). VWAP, meanwhile, gives intraday traders a running sense of fair value for the day. Put one trend tool and one fair-value tool on the chart and you already have more than enough to read most setups.

You can pull any of these charts up in seconds on TradingView, which is the platform we chart with daily and the one we walk through in our best charting tool review. Once your layout is set, practice on live names: watch how these chart types and tools behave around the tickers on our weekly stocks to watch list and the concepts above start clicking in real time.

Frequently Asked Questions

What is the best chart type for beginners?

Start with the line chart to read direction, then graduate to candlesticks. The line strips price down to the closing trend, which keeps things uncluttered while you build intuition. Candlesticks add the open, high and low, and they are the standard you will use long term, so the sooner you get comfortable with them the better.

What is the difference between a candlestick and a bar chart?

None, in terms of information. Both show the open, high, low and close for each period. A candlestick fills the open-to-close range with a colored body, which makes the trend pop visually. A bar chart shows the same range as a vertical line with an open tick on the left and a close tick on the right. It comes down to which look you find easier to read.

Which chart type is best for day trading?

Candlesticks on fast timeframes, the 1, 5 and 15-minute, paired with volume and VWAP. Day traders need to see the open, high, low and close of each short period quickly, and candlesticks deliver that at a glance better than any other type.

Do I need expensive charting software to start?

No. A free charting platform with candlesticks, volume and a moving average covers the vast majority of what new traders need. We use TradingView for stocks and crypto, and its free tier is more than enough to learn on before you ever consider paying for more.

What is the most popular stock chart?

The candlestick chart, by a wide margin. It became the global default because it shows the most useful information, the open, high, low and close plus the bullish-or-bearish color, in a single, easy-to-scan mark. Almost every platform opens to a candlestick chart for that reason.