The Frugal Biddy decided to start learning about stocks in August. Several followers have purchased a book that I bought 20 years ago called Wow the Dow. Wow the Dow is a complete guide to teachingkids about investing in the stock market. It is basic enough that kids can learn as well as adults.
However, I thought it would be a great idea to put together a Beginners Guide to Reading a Stock Chart.
I know that some people may not want to read the entire post so I have included a Cheat Sheet to Reading Stock Charts as a PDF Printable.
A Beginners Guide To Reading a Stock Chart: What Do Those Abbreviations Mean?
Every stock has an abbreviation called a symbol. This is one of the most important things to know about reading a stock chart. The two most popular exchanges are the New York Stock Exchange (NYSE) and NASDAQ.
The NYSE has three symbols or less. The NASDQ has four symbols.
Beginners Guide To Reading A Stock Chart: Analysis of a Stock Chart
Stock prices used to be written in whole numbers AND fractions. For example, a stock price of $51.63 was 51 3/8. Now they are written in decimals as you can see below.
Beginners Guide to Reading a Stock Chart: What Do These Columns Mean?
Highs and Lows of Stock Prices
Columns 1 and 2 contain the 52 week price high and low of the stock price. This information will help you to understand if you are losing money or if you have gained money. You will also be able to decide if you really want to buy a particular stock.
Stock Name and Ticker Symbol
Column 3 contains the name of the company. The company’s symbol for the exchange is in Column 4.
Yield and Dividends
Column 5 is the annual dividend (payment you earn)per share of stock.
Column 6 is the percentage return on the dividend yield which is the gain from the time the stock was bought. However, this doesn’t include any capital gains in the calculation. How to Understand Dividend Yield can explain better than I can about this.
The Price to Earning (P/E) (Column 7) equals the current stock price divided by earnings per share for the last four quarters.
Number of Stocks Traded and Prices Traded That Day
Column 8 lists all the shares of stock traded that day; meanwhile, Columns 9 and 10 provide the range of prices the shares sold for during the day.
How Much Did My Stock Ultimately Go For That Day?
Column 11 shows the closing price and the net change is how much the value of the stock changed from the previous day (Column 12).
Was this a lot to take in? It takes practice in order to understand about the stock prices. I know this is a lot of information to pack in so please feel free to print the FREE PDF printable which is a very easy cheat sheet for reading stocks!