Bar Chart

With a Line Chart you can see the daily closing price of a stock over a period of time. But what if you wanted to know how the price moved during the day (intra-day price movement)? A Bar Chart is the perfect tool for this.

What is a Bar Chart?

This chart cleverly summarize the price movements of a stock within a trading day. A vertical line or a "bar" along with two horizontal lines tell us four things about the day:

1. The highest price.
2. The lowest price.
3. The opening price.
4. The closing price.

This kind of chart is also called an OHLC Chart — Open High Low Close Chart.

An Example

Let's look at an example to get a better understanding of how this chart works.

Some interesting observations from this chart:

• On four consecutive days starting Sep. 14, the stock closed higher than it opened. In these four days, the stock rose by a total of 8%.

• From Sep. 29th - Oct 1st the stock price showed three consecutive days of red, declining a total of around 2%.

• Sep. 16th and Oct. 1st saw the largest range for the stock price within a trading day .... around $5. Sep. 16th was a green day, while Oct. 1st was a red day.

Take Home Lesson

So what what does all this tell us? The chart, over the one month we've looked at, can tell us how volatile the stock is ..... how much the stock price tends to "bounce" over a short period of time. The length of the bars gives us a good indication of the intra-day volatility.

Technical Analysts widely use this chart to distinguish trading patterns. For instance, consecutive green days could trigger buy signals, while consecutive red days might signal that it's time to sell.

In summary, we've looked at an important type of stock chart here — one that gives us an effective summary of the trading activity within the day. The Apple Inc. example showed us what a real-life chart looks like. We've seen how these charts give us an idea of the volatility of a stock and have briefly discussed how this volatility along with certain patterns could be interpreted by traders.

Return from Bar Chart page to Stock Charts page