Charts are the language of the market. Once you understand how to read them, you can identify trends, time your entries, and avoid emotional decisions. This lesson shows you exactly how to read a chart using the same method that professional traders use.

1. What Is a Chart?

● Definition: A chart shows a stock's price over time.

● Use: Helps traders visualize what the price is doing—going up, down, or sideways.

​● Note: The chart doesn’t predict the future; it shows what’s happening right now.

2. Types of Charts

A. Line Chart

● Plots only the closing price of a stock over time.

● Easiest to read, but lacks detail.

● Example: Looks like a basic line moving up or down.

B. Candlestick Chart

● Shows four pieces of data per candle:

1. Open
2. High
3. Low
4. Close

● Provides more insight into market behavior.

● Most commonly used chart by traders.

3. Anatomy of a Candle

Each candle tells a story. Here’s how to read it:

A. Green Candle

● Close > Open = price went up during that time period.

● The bottom of the body = Open

● The top of the body = Close

● Wicks = extremes (High and Low)

B. Red Candle

● Open > Close = price went down.

● The top of the body = Open

● The bottom of the body = Close

● Wicks still represent the High and Low.

● Tip: The color quickly tells you if the price went up (green) or down (red).

4. Timeframes

● Charts can be set to different time intervals.

● Each candle represents a set period of time.

Common Timeframes:

● 1-minute = each candle shows 1 minute of price action.

● 5-minute = each candle shows 5 minutes.

● Daily = each candle = 1 day.

● Weekly = each candle = 1 week.
Choose your timeframe based on your trading style.

● Short-term trader = shorter timeframes

● Long-term investor = daily or weekly charts

5. Trends vs. Chop

A. Trending Market

● Price moves in a clear direction—up or down.

● Easy to spot on a chart: looks like a staircase.

● Uptrend = Higher highs and higher lows.

● Downtrend = Lower highs and lower lows.

B. Choppy Market

● Price goes sideways.

● No clear direction.

● Trades bounce up and down with no follow-through.

● Harder to trade profitably.

6. Multi-Timeframe Analysis

● Use multiple timeframes to confirm direction.

● Example:

○ The daily chart shows an uptrend.
○ The hourly chart also shows an uptrend.
○ This gives you more confidence to go long.

● Avoid trading against the higher timeframe trend.

7. Where to Look

● Focus Area: The most important part of the chart is the far right side, that’s where the current price is.

● Don’t get distracted by what happened 3 months ago.

● Use historical data only to spot patterns and trends.

This lesson teaches you how to read what’s actually happening with a stock’s price using candlesticks and multiple timeframes. You now know how to identify trends, spot choppy markets, and read candles with precision.

In the next lesson, you’ll learn how to use indicators that actually work—without cluttering your charts or causing confusion.