Guide
How to read a price chart: candles, volume and timeframes
Line charts, candlesticks, volume bars and moving averages: what the parts of a price chart mean and the mistakes beginners make reading them.
By Hodlia.fi editorial team · · 5 min readA price chart shows what buyers and sellers actually paid over time. It tells you what has happened, not what will happen. Here are the parts you’ll see on most charts, including the TradingView charts on Hodlia.
Timeframe
Start with the timeframe, for example 1 day, 1 month, 1 year or 5 years. The same asset can look like it is crashing on a 1-day chart and rising steadily on a 5-year chart. Long-term investors usually care most about the longer views.
Line vs candlestick
- A line chart connects closing prices. It’s simple and good for seeing the trend.
- A candlestick shows four prices for each period: open, high, low and close (OHLC). The thick body runs from open to close and the thin “wicks” show the high and low. On most charts a green (or hollow) candle closed higher than it opened, and a red one closed lower.
Volume
The bars under the price show volume, how much was traded in each period. A big price move on high volume means many participants took part. A move on very thin volume can reverse more easily.
Moving averages
A moving average smooths prices, for example the average closing price of the last 50 or 200 days. Traders watch whether the price is above or below it. It is a description of the past, not a signal that works reliably.
Log vs linear scale
On a linear scale, each step on the axis is the same amount of money. On a logarithmic scale, each step is the same percentage. For assets that have grown many times over, such as bitcoin or a long-run stock index, a log scale gives a fairer picture.
Common mistakes
- Seeing patterns in noise. Short-term moves are mostly random.
- Forgetting dividends. Price charts usually exclude them, so they understate total return for dividend stocks.
- Comparing assets in different currencies without noticing. Hodlia shows crypto in the currency you pick and stocks in USD.
Sources
- U.S. SEC, Investor.gov glossary: Candlestick chart, Moving average, Volume
Educational content, not financial advice.