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World 0 · Start Here · lesson 7 · level 1
Your first chart
A chart is a picture of price over time: time runs left to right, price runs bottom to top, and each candle sums up one period.
In one line
Every price chart tells a story from left to right. Ready to read your first one?
Explained simply
A chart is a picture of how a price changed over time, like marks on a wall that show how tall you grew each year. Time moves from left to right and price goes up the side, so a line that climbs means the price went up. A candle is a tiny picture of one day that shows where the price started, how high and low it went, and where it finished.
The lesson
On a price chart, time runs along the bottom from left to right and price runs up the side, so the newest price is always on the right. A line chart joins one price per period, usually the closing price, while a candlestick chart draws one candle per period, and the length of that period, such as one day or one hour, is called the timeframe. Each candle shows four prices, the open, the high, the low and the close, and a green candle closed above its open while a red candle closed below it. A chart is a record of the past, so it helps you see what happened, but it cannot tell you for sure what happens next.
A worked example
Illustrative example: a share closes at 100, 104, 102, 108 and 110 on five days, so its line chart climbs from 100 to 110, a rise of 10 (110 minus 100). On the last day the candle opened at 108, rose to a high of 113, dipped to a low of 106 and closed at 110, so it is green because 110 is above 108. Its body is 2 tall (110 minus 108) and its whole range, from low to high, is 7 (113 minus 106).
The same idea at four levels
- Beginner. A chart shows price over time: time goes left to right and price goes bottom to top.
- Foundation. The newest price is on the right edge, and a line going up means the price rose.
- Intermediate. Each candle shows the open, high, low and close for one period, such as a day.
- Advanced. Green means a candle closed above its own open and red means it closed below, and the timeframe tells you how long each candle lasts.
- Expert. A chart records what buyers and sellers already did, so traders use it to plan and to manage risk, never as a promise about the future.
Mistakes to avoid
- Reading a chart right to left, when time moves left to right and the newest price is on the right.
- Thinking a green candle means the price is higher than yesterday, when it only means it closed above its own open.
- Thinking a chart shows where price will go next, when it only shows where price has been.
Check yourself
On a price chart, which way does time move?
Left to right. The oldest prices are on the left and the newest on the right.
Where is the newest price on a chart?
On the right edge. Time moves left to right, so the newest price is on the right.
What does a line going up mean?
The price rose. Price runs up the side, so a climbing line means a rising price.
Which four prices does a candle show?
Open, high, low and close. Together these four prices are often written OHLC.
A candle opens at 108 and closes at 110. What colour is it?
Green. It closed above its open, so it is green.
Goal of this lesson: Read a price chart as price over time and take a first look at a candle's open, high, low and close.