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 Read Volume on a Stock Chart

Start with the information that appears across the top of the chart. The first items are the date the chart refers to along with the name and ticker symbol of the stock. Next, you'll find price information, giving the day's high, low and closing figures for the stock. Along with this, you'll read the volume on a stock chart. This is the daily volume of shares traded. There's usually one more piece of information listed, called the moving average. This is indicated by the letters MA followed by a number in parentheses and a price. This is the average price the stock traded over the number of days indicated by the number in parentheses.
Look at the rest of the stock chart. You will see two graphs, one in the middle of the page and a bar graph across the bottom. The one in the middle will consist of a line graph with the line bracketed by a bar (also called a candlestick) for each day the chart covers. This is really three graphs in one. Those bars don't refer to the day's volume but to the price range for the stock each day. The top of each bar or candlestick shows the daily high, and the bottom shows the low. The line graph itself shows the closing price.
Examine the bar graph at the very bottom of the page. This graph records the volume of shares traded for each day the chart covers. The height of the bar indicates the number of shares traded. Use the scale (usually located on the far left) to determine how many shares the height of each bar represents.
Learn how to read volume on stock charts in the context of the other information you see on the chart. Changes in the volume of trading can be very informative. For example, if you see an increasing number of shares being traded and the stock is in an upward trend, it indicates that investors are bidding up the stock price. An experienced trader will watch for a drop in that volume that may signal the upward climb in prices is reaching its peak.

How to Invest in the UK Stock Market (6 Steps)

Search for an experienced broker who is registered with the London Stock Exchange. A number of major American firms have been well-established in London for years and provide expert knowledge on the vagaries of the UK stock market. Approach younger brokers with caution because of the high trading volume in the UK market.
Research available investment trusts to decrease the risk when you invest in the UK market. Investment trusts allow you to invest with a broker who pools client funds to purchase shares in leading stocks. These trusts spread the burden across an entire group of investors while diversifying your portfolio.
Familiarize yourself with the FTSE 100 and FTSE 250 markets when you start investing. These are the basic stock and equity markets in the London Exchange because they offer the most fluid transactions available in the British economy.
Speculate in shares of a growing tech stock or expanding medical-supply company through the Alternative Investment Market (AIM). The AIM exchange features a higher level of risk because the 1,500 member companies have a lower profile or less stable financial history than the FTSE 100. Begin your AIM experience by purchasing a few low-priced shares as an experiment.
Find the next big company in the UK economy on the Off Exchange market. This market features unlisted publicly traded companies from other markets that do not have the same trading restrictions. This type of trading should be done only when you have experienced success in the other markets.
Broaden your investment in British companies by the newly created exchange-traded funds (ETF). These funds allow you to invest in a fund that is tied directly to the performance of a specific industry or index.