How to Read Stock Index Chart for Beginner Traders
Stock Index charts are used to illustrate the stock index price movement of a stock index instrument. This stock index price movement is plotted on a stock index chart and traders can analyze the stock index chart patterns on the stock index chart so as to determine when to open a buy stock index trade or a sell stock index trade transaction.
Stock Index trading charts can be used by traders to gain a better understanding of the stock index price movement based on analyzing past stock index price data - this stock index price data analysis is then used by stock index technical analysis traders to predict the next likely future stock index price direction.
How to Get Stock Index Charts
Stock Index charts are provided for on the stock index trading platforms such as the MT4 and MT5 platforms.
To get stock index charts on MT4 and MT5 platforms:
MT4 - To display the stock index chart in MetaTrader 4 platform follow the step below:
- Go to the Market Watch on the Top Right of the MT4 Stock Index Trading Platform
- Select The Stock Index Instrument you want to trade
- Right Click on this Stock Index Instrument
- From the Pop Up Menu Select Open Stock Index Chart option to open the stock index chart on MT4
MT5 - To display the stock index chart in MetaTrader 5 platform follow the step below:
- Go to the Market Watch on the Top Right of the MT5 Stock Index Trading Platform
- Select The Stock Index Instrument you want to trade
- Right Click on this Stock Index Instrument
- From the Pop Up Menu Select Open Stock Index Chart option to open the stock index chart on MT5
How to Interpret Stock Index Charts
Stock Index charts price movements can be analyzed using stock index trend analysis & stock index patterns technical analysis.
Stock Index trend analysis will determine if the stock index prices are moving in an upward stock index trend or a downwards stock index trend.
Stock Index chart patterns will try to identify commonly repeating stock index chart patterns so as to try and determine what is the next likely stock index price direction based on the technical analysis of these commonly repeating price patterns.
The three most commonly used stock index charts are:
Line Charts - stock index line chart is a line connecting one closing stock index price & the next. Line chart does not give much information about stock index price movement compared to other stock index chart types.
Bar Charts - stock index bar charts show open, high, low and close of stock index price - OHCL. Stock Index bar charts provide stock index traders with a little more information than stock index line charts.
Within the bar the opening price, the high price, the low price & closing price are represented.
The vertical line of a bar chart shows the stock index price range for a particular stock index price period the top of this vertical bar shows the high of the stock index price while the bottom of this vertical bar shows the low of the stock index price, two horizontal lines one to the left shows opening stock index price and one on the right shows the closing stock index price.
Candle Stick Charts - stock index candlestick charts show the opening stock index price, the high stock index price, the low stock index price & closing stock index price.
The opening and closing price are used to detect when a stock index candle is bullish or bearish.
Bullish stock index candle is when the stock index close price is higher than the stock index open price.
Bearish stock index candle is when stock index close price is lower than the stock index open price.
How to Read Stock Index Chart for Beginner Traders - How to Analyze Stock Index Charts
