How To Read Bar Charts

How To Read Bar Charts

The Beginner Trader

How to read a bar chart

Before you can read a full bar chart with all those confusing lines and indicators, you need to know what a bar is made up of and what each individual bar tell us. So let’s start with the basics. 

What is a bar chart?

A bar chart as it relates to a stock, gives us information on the price of a stock on a given month, week, day, hour, minute, or even second. The time frame you choose depends on what your strategy requires which we will not get into in this post. The chart is made up of multiple bars. Learning how to read a single bar is the first step in learning how to read the charts and look for patterns that will fit your future trading strategies.

What do the bars signify?

A single bar will give you 4 main points of information. A bar is made up of a body and (usually) one or two wicks. Although it is possible to have candle with no wicks. The color of the body tells you if the price went up or down during the time period that bar lasted. A red candles signifies the bar closed lower then it opened, or went down. A green candle tells you the opposite.

The 4 points of information a candle gives you:

  • The price the bar opened
  • The price the bar closed
  • The high of the candle
  • The low of the candle

Check out the images below and see if you can spot the one difference that would make a candle red or green. Do you see it?

Understanding these concepts is one of the first steps in learning how to read a chart. When you combine multiple bars together you will start to see patterns. When you take those patterns and add other indicators to your charts, you will start to get buy and sell signals. We will get into these patterns and strategies in future posts.

Red Candle - Stocks Charts
Green Candle - Stocks Charts

October 2020: Investment Update

October 2020: Investment Update

My Investment Tracker – October 2020

From time to time I will be posting updates on my trading accounts. My P&L, current holds, and what I am thinking about moving forward. I am still in the learning process and trying out different strategies hoping to really hone in on 2 to 3 strategies that I can master. I started my IRA with $2800 in December 2018, and my brokerage account with $3500 in early 2020. Not included in the numbers below are my BTC holdings and general savings.

My IRA (US Dollars)

Brokerage Account

Below are the overall results from my past 60 days of trading. I had been cruising at around 90% P&L for a little while, but finally sold off some losing positions to start to bring my numbers back to a more normal range. I am still working on getting rid of losers faster, as you can tell.

Biggest Gainers (%)
$TSLA: +97%
$PLUG: +20.6%
$GRWG: +15.71%

Biggest Losers (%)
$PRVB: -30%
$SLDB: -22%

Long terms holds: $TSLA, $NOBL
Short term holds: $GE, $PLUG
Speculative play: $RLFTF – my first venture into penny stocks. We’ll see how this goes.

Lessons learned: Both PRVB and SLDB were dumb holds on my part. They didn’t need to be such big losses in terms of percentage. I think because I am still not playing with huge sums of money, I tend to let the losers go a while thinking “it’s okay, it’s only $x dollars, not too bad” but I have to be more disciplined and remember that every little bit counts. Most of the losing trades came from my brokerage account, which brought me back nearly to where it had started. 

Always do your own investment research. My website is not meant to be investment advice. It’s just a way for me to track and keep accountable as well as to share my knowledge and experience. 

60 Day Results - All Accounts