Understanding price movement is the foundation of technical analysis. Every day, thousands of trades shape the price of a stock—but how do you see that movement clearly?
That’s exactly where charting comes in.
In this article, we’ll break down the three most widely used chart types: Line Charts, Bar (OHLC) Charts, and Candlestick Charts. By the end, you’ll know how each one works and which is most useful for trading decisions.
1. Why Do We Need Charts?
The stock market is open from 9:15 AM to 3:30 PM, and during these hours prices constantly fluctuate. Compressing this huge amount of information into a simple visual form is essential for identifying trends and taking informed trades.
Charts help you quickly answer questions like:
- Is the price trending up or down?
- Was the day bullish or bearish?
- What was the highest and lowest price touched?
- Where did the market open and close?
Different chart types show different levels of detail. Let’s start with the simplest.
2. Line Charts: Clean but Limited
A line chart plots only closing prices across time.
For example, if Tata Motors closes a bit higher each day, the line will slope upward.
⭐ Advantages
- Simple and easy to read
- Good for identifying long-term trends
❗ Limitation
A line chart hides three important pieces of daily price information:
- Opening price
- Highest price
- Lowest price
So while you can see the trend, you miss a lot of intraday movement.
This is where OHLC charts come in.
3. OHLC (Bar) Charts: More Data, More Insights
An OHLC chart—short for Open, High, Low, Close—represents each day using a single vertical bar plus two small horizontal lines.
Here’s what each part shows:
- Top of the bar: Day’s high
- Bottom of the bar: Day’s low
- Left horizontal tick: Open
- Right horizontal tick: Close
Why is this useful?
An OHLC chart lets you see:
- The price range for the entire day
- Whether the stock closed higher (bullish) or lower (bearish) compared to the open
- Market volatility
But there’s one challenge…
From a distance, bull and bear days look very similar—you must closely inspect the open-close ticks.
Traders need a chart that clearly shows bullish vs bearish with colours.
And that’s where candlesticks shine.
4. Candlestick Charts: The Trader’s Favourite
Candlestick charts display all OHLC information but in a much more visual format.
Structure of a Candlestick
A candlestick has:
- Body: Area between open and close
- Upper wick/shadow: High of the day
- Lower wick/shadow: Low of the day
Colour coding
- Green candle: Close > Open (bullish day)
- Red candle: Close < Open (bearish day)
This makes candlestick charts incredibly intuitive. You can identify:
- Market sentiment
- Reversals
- Strength of buyers or sellers
- Trend momentum
Candlesticks are the most widely used chart type in modern trading—and for good reason.
5. Which Chart Should You Use?
| Chart Type | Best For | Detail Level |
|---|---|---|
| Line Chart | Long-term trend view | Low |
| OHLC/Bar Chart | Professional price analysis | Medium |
| Candlestick Chart | Daily trading, patterns, sentiment | High |
Beginners, swing traders, intraday traders—all benefit enormously from candlesticks because of their clarity and visual power.
Conclusion
A strong understanding of chart types sets the foundation for deeper topics like candlestick patterns, trend analysis, and momentum studies.
Here’s what you learned:
- Line charts show only closing prices—simple but incomplete.
- Bar (OHLC) charts reveal the day’s entire trading range.
- Candlestick charts combine all information with clear bullish/bearish visual cues.
In the next step, you should explore timeframes, which decide how much price data each candle or bar represents.
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