How to Read Stock Charts

Print out a sample stock chart to examine (see 'Additional Resources,' below). Stock charts can be set up on a daily, weekly or long-term format, but they all follow the same basic plan. Start at the top where you will see the stock symbol and date of the chart. Also at the top are the day's high, low, and closing prices and the volume of shares traded.
Look just below the top line of information. You will see an entry that says MA(30), MA (60) or some other number. This is the moving average. It is the average price of the stock over recent past. The number in parentheses tells you how many days the moving average covers. At the very bottom of the chart there should be a bar graph. This gives you the volume of shares traded each day the chart covers.
Examine the main graph between the top and the volume bar graph at the bottom. Each day's trading is usually represented by a short bar or 'candlestick.' The top of the bar indicates the high for that day and the bottom the low. If there is a graph line passing through these bars, it indicates the closing price.
Notice which way the graph of the stock price is pointed. If it is headed toward the upper right corner, the stock is in an upward trend. If it's pointed at the bottom right, it is in a downward trend. Sometimes the graph doesn't seem to be moving one way or the other, and traders call this a period of consolidation.
Understand the function of a stock chart. The point is to spot trends early so you can buy early in an upward trend and sell early in a downward trend. Traders use a number of indicators to do this. For example, look for price supports. A price support is a price below which the stock rarely drops. When it approaches the price support, it's likely to reverse the downward trend and start moving up. A price resistance is the same thing in reverse: a price the stock falls short of. If it gets close, the stock price tends to reverse direction and decline.

How to Calculate Stock Price Volatility

Gather stock price information. You will need at least a month of daily stock price data. However, you will get the best results by using at least six months of data. If you don't know how to do this, go to Yahoo! Finance, input the stock's ticker symbol into 'Get Quotes,' and click on 'Historical Prices.' Copy and paste this information directly into a spreadsheet. Label Column A to represent historical stock price trading dates and Column B to show daily closing stock prices.
Find the average price over the length of time you chose. For example, if you pulled out six months of information, take the average price over 183 days. This can be set up as the AVERAGE function or by taking the sum of all daily prices (Column B) and dividing by 183.
Calculate the difference between the daily price (Column B) and the average over the range of data. If you're using a spreadsheet, create a Column C, which will refer to this difference, by subtracting Column B from the average. Copy and paste this function down the length of the data on your spreadsheet.
Square the difference. Create a Column D into which you put the square of Column C. You do this by multiplying the Column C value by itself. Now find the sum of Column D and divide by your days range (183 days for 6 months of data). This is called the variance.
Take the square root of the variance, using the SQRT function. This result gives the stock's standard deviation for the entire sample of price data. In the investor world, this number represents a measure of stock-price volatility.
Check your results with a historical-volatility calculator. Use the same data referred to in the calculations above. See Resources for a link to an historical-volatility calculator.