If you invest in the stock market, tracking stock prices is crucial to success. Stock prices change yearly, daily, even hourly based on the contextual economic trends. Tracking stock prices will aid you in knowing the best times to buy or sell. The best method for visually analyzing stock prices is to use a line graph. You may not be able to predict the future, but you will be able to examine the past.
Things You'll Need
- Stock price data collected over a period of time
- Graph paper, pencil and ruler for manual graphs
Draw a right angle on your graph paper using the pencil and ruler. According to the article "How to Construct a Graph," on the Oklahoma City Community College website, the horizontal line, known as the X-axis, will hold "the independent variable (the manipulated variable, the one that you can control)." The vertical line, known as the Y-axis, will have the "dependent variable (the responding variable, the one that results from the manipulated variable)."
Place small, evenly-spaced notches along the X-axis to represent the time period of your data collection. For example, if you collected your stock prices over a period of days, each notch in the X-axis will represent a separate day. Make the last notch at the end of the X-axis the last day you recorded your stock price.
Place small, evenly-spaced notches along the Y-axis to represent the possible stock prices. Keep the increase from one notch to the next the same to facilitate data entry. The last notch on the Y-axis should be a value greater than the last stock price you recorded. This will allow the graph to contain the data.
Align the first stock price over the first date on the X-axis. If the price does not align directly with a notch in the Y-axis, approximate the location based on the increase from one notch to the next. For example, if two price notches on the Y-axis are 5 and 6, and your stock price is 5.5, place the dot halfway between the two notches.
Continue drawing one point for each time you recorded a stock price, continuing to match the point to appropriate location on the Y-axis.
Once all the points are placed on the graph, connect the dots sequentially to view the fluctuation in stock prices during your observation time.
Tips & Warnings
- Graphing software such as http://www.dplot.com exists for those who desire digital graphs.
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