The Best Way to Read a Stock Chart

Reading a stock table is an important skill.

Learning to read a stock chart is an important first step to investing in the stock market. As a new investor, you have a lot to learn about the stock market and how it works, and getting to understand the various statistics and figures reported each day in the financial media will give you a good head start. Stock charts contain a wealth of information, from the earnings of the company to its price history.

Things You'll Need

• Financial publications

Instructions

1. Make a list of stocks you want to track. You can choose the stock of the company you work for, or the stocks of companies whose products you know and use.

2. Choose a quality financial publication with a detailed stock table. The Wall Street Journal, Investors Business Daily and Barron's all contain highly detailed stock charts.

3. Circle each stock you want to review. The stocks in a stock table are listed by ticker symbol and not by name, but you can look up the ticker symbols for your chosen stocks by using an online financial site such as CNN Money or Yahoo! Finance.

4. Check the current price of each stock. This figure is typically listed first on the stock chart, followed by the gain or loss fro the previous day's close.

5. Find the P/E ratio for each of your stocks. The P/E ratio is the price of the stock divided by its earnings per share. A stock with a price of $21 and earnings per share of $1 would have a P/E ratio of 21.

6. Find the 52-week high and low for each stock. These statistics are generally located near the right-hand side of the stock table. The 52-week high and low values are a good indicator of the volatility of a stock. A stock with a 52-week high of $30 and a low of $10 is likely to be more volatile than one with a high of $18 and an low of $12.

References

• Money Magazine: Money 101 -- Stocks