Reference
Stock Charts and What They Discard
Every chart type is a decision about what to throw away. A line keeps one number per session, a bar keeps four, and a volume profile throws away time itself, so the first question about any chart is which of them you are looking at.
A session generates at least five numbers worth keeping: the open, the high, the low, the close and the volume. No chart shows all of them equally, and each type discards something specific, which means choosing a chart type is choosing which questions you can still answer.
What each type is for
A line of closes is the cleanest way to see a long history and the worst way to see a session. The close is the price with the most agreement behind it, so a line chart is not wrong. It simply cannot distinguish a quiet session from a violent one that ended where it started.
Bars and candles keep the open, high, low and close. That is enough for range, enough for the volume-against-range comparison the volume spread method depends on, and enough for average true range. Candles draw the same four numbers with the open-to-close relationship emphasised; the information is identical.
A volume panel adds the one quantity price cannot contain: how much stock changed hands. Nearly every claim in this reference is a comparison between a price move and the volume that produced it, which is impossible without it.
A volume profile discards time and keeps price, which makes it the odd one out and genuinely useful for one question: at which prices did the trading actually happen. The volume-by-price page works through what a profile supports and where it misleads.
What a chart cannot contain at all
Three of the measures this reference relies on most are not properties of one instrument's chart, and no amount of drawing on a price panel will produce them.
Breadth. How many issues took part in a move is a census across an exchange, and it is the question a chart of one instrument, or of a weighted index, cannot answer. That is the whole reason the breadth section exists, and it is why an index chart making a new high is compatible with most of the market falling.
What the volume was made of. A volume panel gives a share count. It does not say how much of that count was short-marked, how much was executed away from the primary venue, or how much was one block against a thousand small prints, and each of those changes what the number means. The short-volume study works through the first on real published data.
Why anything happened. A results date, an index rebalance, an expiry or a placement produces a session that looks remarkable on any chart and has a published cause. Checking the calendar before the chart is the cheapest habit in this reference, and it is the one that most often turns an apparent signal back into a scheduled event.
The two chart mistakes worth naming
Two measures on one vertical axis. Putting price and volume, or any two quantities with different units, on a single scale forces an arbitrary choice about how to align them, and the apparent relationship between the two lines is then a property of that choice. Two panels on a shared horizontal axis costs nothing and removes the problem entirely, which is why every figure on this site is built that way.
An unstated scale. Log and linear charts of the same series support different statements, and a straight line means something different on each. Over a period in which price doubled, the two are not variations on a theme, the trendline page computes how far apart they end up from the same two anchor points.
Comparing instruments
The one chart operation where the method decides the answer rather than shading it. Two instruments cannot be compared on their raw prices, and the fix is arithmetic rather than judgement.
- Comparing two instrumentsWhy a raw price chart can reverse the ranking, what indexing to 100 fixes, and where dividends and currency enter.
What to put in the second panel
A price chart alone answers one question. Each of these adds a measurement that price cannot contain, and each is computed from the data rather than drawn on top of it.
- The high-low rangeHow much ground each session covered, and the sessions where range and volume disagree.
- Volume by priceWhere the trading actually happened, with time discarded, the one profile in this reference that is not a time series.
- VWAPThe volume-weighted average price: a reference level that exists because of execution measurement rather than prediction.
- A volume baselineThe denominator that turns a share count into a reading you can compare with anything.
Drawing on the chart
Tools that require the analyst to choose something before they return anything. Worth keeping separate from the measures above, because the choice ends up inside the answer.
- Chart toolsLevels, trendlines and channels ordered by how much of the output the analyst chooses.
- TrendlinesTwo chosen points and a chosen scale, and the same two points give different lines on the two scales.
- Pivot pointsLevels computed from one completed session, so there is nothing to choose but the variant.
Many instruments at once
The same trade-off applied across a whole market instead of one instrument: these give up the session detail entirely and buy breadth with it. Useful for finding where to look, never for measuring what happened.
- Stock heatmapsA size chart that has been coloured, quick for locating a large name, and unable to answer how much of the market moved.
- Sector heatmapsThe map is drawn from somebody’s classification, providers disagree on the interesting cases, and moving one company changes two blocks.
Frequently asked questions
Does this site have live charts?
No. It is a static reference, and a chart that claimed to be live while showing a snapshot from months ago would be worse than no chart at all. What is here instead is the part that does not expire: what each chart type records, what it discards, which question each one answers, and how to read the second panel. Every figure on these pages is computed when the page is built and labelled with what it was computed from.
Which chart type should I use?
A bar or candle chart with a volume panel, for almost everything. That gives you five numbers per session — open, high, low, close and the share count — which is what every measure in this reference assumes you can see. A line chart of closes is cleaner and discards the session’s range, and range is exactly what half the useful observations depend on.
Are candlesticks better than bars?
They contain identical information (open, high, low, close) drawn differently. A candle body makes the open-to-close relationship easier to see at a glance, which is a real readability gain, and it also carries a large vocabulary of named single-bar patterns whose evidence is much weaker than their popularity. Use whichever you read more easily; do not expect the drawing style to add information.
Log or linear scale?
Log for anything spanning a substantial price change, because equal vertical distances then mean equal percentage moves. On a linear chart a move from 10 to 20 looks identical to one from 100 to 110, and the first doubled while the second gained ten per cent. The scale also decides what a straight line means, which is why any trendline is unreproducible unless the scale is stated.
What does a chart of closes throw away?
Most of the session. Two sessions that closed at the same price can have covered wildly different ground, and a line chart records them identically, a quiet drift and a violent reversal look the same. The range page works through what that costs, including the sessions where range and volume disagree, which is the configuration a close-only chart cannot show at all.
Why does volume belong in a second panel rather than on the price axis?
Because it is a different quantity on a different scale, and putting two measures on one vertical axis is the most common chart mistake there is. Volume is a share count; price is a price. Two panels sharing one horizontal axis keeps both readable and comparable over time, which is why every figure on this site is built that way.
What about intraday charts?
The same chart types apply and two things change. Volume has to be compared against the same time of day rather than a flat average, or the reading describes the clock; the session-shape page sets out how. And any indicator threshold calibrated on daily data has to be recomputed, because an oscillator on one-minute bars crosses its levels dozens of times a session.
Where should someone start?
With a bar chart, a volume panel and a twenty-session volume average, and nothing else on the screen. That combination answers the two questions that carry most of the information (how far did it move, and how much stock did it take), and it is the setup every page in the indicator library implicitly assumes. Adding measures before those two are being read properly makes the chart busier rather than more informative.