What Is a Stock Chart?

What Is a Stock Chart?

A stock chart is a visual representation of a company's share price over time. Instead of staring at tables of numbers, a chart lets you see patterns, trends, and turning points at a glance. For anyone investing on the Nairobi Securities Exchange, learning to read charts is an essential skill.

The Two Axes

Every stock chart has two axes:

• Horizontal axis (X-axis) — Represents time. This could be days, weeks, months, or even years depending on the timeframe you choose.
• Vertical axis (Y-axis) — Represents price in KES. The scale adjusts automatically to show the price range for the period displayed.

Why Charts Matter

Numbers alone can be misleading. A stock might be trading at KES 42 today, but is that good or bad? A chart instantly shows you whether the price has been climbing from KES 30 or falling from KES 55. Context is everything.

Charts help you:

• Spot trends — Is the stock generally moving up, down, or sideways?
• Identify entry points — Find moments when a stock might be at a good price to buy
• Set expectations — Understand the stock's typical price range and volatility
• Confirm your research — See whether the market agrees with your fundamental analysis

Types of Charts

There are three main types of stock charts you will encounter:

1. Line charts — The simplest form, connecting closing prices with a line
2. Bar charts (OHLC) — Show open, high, low, and close for each period
3. Candlestick charts — Similar data to bar charts but displayed with coloured bodies for easy reading

We will explore each of these in the following lessons. By the end of this module, you will be able to look at any NSE stock chart and understand what it is telling you.