0.3 Charts for beginners

0.3.1Line, bar and candle#

For each interval (a day, a week, five minutes) the market produces four prices: open (first trade), high, low and close (last trade or official close), together called OHLC, and a volume.

• A line chart joins the closes. It is the cleanest picture of the trend and hides the intraday range.
• An OHLC bar is a vertical line from low to high with a tick to the left at the open and a tick to the right at the close.
• A candlestick draws the same four numbers differently: a body between open and close, filled (conventionally red or black) when the close is below the open and hollow or green when it is above, and wicks (shadows) up to the high and down to the low.

Bars and candles carry exactly the same information. A candle makes the open-to-close move prominent, which is why it is the default in Indian apps. Note that the colour compares the close with the open of the same bar, not with the previous close: a stock that gaps up 3% and then drifts down 1% prints a red candle on a day it rose 2%.

0.3.2Timeframes#

The interval of each bar is the timeframe: 1-minute, 5-minute, 15-minute and hourly for intraday trading; daily for swing trading; weekly and monthly for investing. A weekly bar's open is Monday's open, its close Friday's close, its high and low the extremes of the week. The same stock can be in an uptrend on the weekly chart and a downtrend on the 15-minute chart; both statements are true. Choose the timeframe that matches the holding period you intend, and look one timeframe up for context (M04A · 4A.1).

0.3.3Linear versus logarithmic scale#

On a linear price axis, equal distances are equal rupee or point changes. On a logarithmic axis, equal distances are equal percentage changes, since $\ln(P_2/P_1)$ depends only on the ratio. For anything viewed over years, use the log scale.

The Nifty 50 makes the point (closing levels from the course's market-data feed, symbol ^NSEI, downloaded 6 Nov 2026; the official series is published by NSE Indices at https://www.niftyindices.com):

Episode	Peak close	Trough close	Fall in points	Fall in %
2008	6,287.9 (8 Jan 2008)	2,524.2 (27 Oct 2008)	3,764	59.9%
2020	12,362.3 (14 Jan 2020)	7,610.2 (23 Mar 2020)	4,752	38.4%
2026	26,328.6 (2 Jan 2026)	22,231.8 (8 Oct 2026)	4,097	15.6%

On a linear chart of 2007–2026, the 2026 fall looks larger than the 2008 crash, because it is larger in points. On a log chart it is about a quarter of the 2008 fall in height, which is the economically correct comparison: an investor lost 59.9% of their money in 2008 and 15.6% in 2026.

0.3.4Volume bars#

Volume is drawn as bars under the price panel, usually coloured like the candle above. Rising prices on rising volume and breakouts on unusually high volume are central to the swing methods of M04 · 4.2; M04A · 4A.3 defines relative volume (today's volume over its recent average) properly. Two cautions. For an index there is no single traded volume; some data vendors print a number for the Nifty, but it is not comparable to a stock's volume, so use the volume of an index future or ETF instead. And volume in intraday charts has a strong time-of-day pattern (high at the open and close), so compare a bar with the same time on earlier days.

0.3.5Adjusted prices#

Corporate actions change the share count without changing the value of the company, and the raw price series jumps:

• Bonus issue $a{:}b$ ($a$ new shares for every $b$ held): the share count is multiplied by $(a+b)/b$ and the price falls by the factor $b/(a+b)$ on the ex-date. A 1:1 bonus halves the price.
• Split: a share of face value ₹10 split into five of ₹2 multiplies the count by 5 and divides the price by 5.
• Dividend: the price falls by about the dividend on the ex-date.

An adjusted series multiplies all prices before the ex-date by the factor, so that returns across the date are correct. For splits and bonuses every serious chart adjusts. For dividends, conventions differ: a price chart usually does not adjust, while a "total return" or "adjusted close" series (the adjusted-close column of many data feeds) multiplies earlier prices by $1 - D/C$, where $D$ is the dividend and $C$ the close before the ex-date. M01 · 1.10 derives the factors. Practical rule: unadjusted charts show false crashes on bonus and split dates, and a 52-week high computed on unadjusted prices can be meaningless.

0.3.6A guided walk through one year of the Nifty#

The figure below replays the Nifty 50 daily candles from 3 Nov 2025 to 5 Nov 2026 with 20- and 50-day simple moving averages (SMA, the average of the last 20 or 50 closes). The numbers come from the course's market-data feed (symbol ^NSEI), downloaded 6 Nov 2026; NSE Indices' historical data (https://www.niftyindices.com) is the official source, and small differences are possible.

What to look at	Number
First close in the window (3 Nov 2025)	25,763.4
Highest close; highest intraday high	26,328.6 (2 Jan 2026); 26,373.2 (5 Jan 2026)
Close on 27 Feb 2026; open on 2 Mar 2026	25,178.7; 24,659.2, a gap down of 2.1%
March 2026	Fell from 25,178.7 to 22,331.4 (30 Mar), −11.3% in the month; worst day −3.26% (19 Mar)
Best day of the year	+3.78% (8 Apr 2026)
Lowest intraday low; lowest close	22,179.9 and 22,231.8, both on 8 Oct 2026
Close on 5 Nov 2026	24,536.6, after a +2.40% day that opened 1.7% above the previous close
20-, 50- and 200-day SMA on 5 Nov 2026	22,976.6; 23,234.1; 24,002.4

How to read it:

1. Trend by structure. From the January high the index made lower highs and lower lows until October: the closing peak of 26,328.6 was followed by a March low, a partial recovery into early August (24,774 intraday high on 3 Aug), and a lower low in October. The year's closing drawdown from peak to trough was 15.6%.
2. Gaps mark news. The 2 Mar gap followed the outbreak of the US–Israel war on Iran on 28 Feb 2026 (M11 · 11.15, M12). On a candle chart a gap is the empty space between one bar's range and the next.
3. Range expansion. March's candles are long and mostly red; daily ranges widened. Volatility clusters (M02 · 2.7): large moves follow large moves.
4. Moving averages as a summary. On 5 Nov the close (24,536.6) is above all three SMAs, but the averages are still stacked downward (20-day below 50-day below 200-day). A beginner reads this as "the price has turned up, the averages have not yet": a fact about the last 200 days, not a forecast. M04 · 4.1 tests whether such rules carry information.
5. The last bars are the least reliable. The download's bar for 6 Nov was incomplete (it was taken during the session), so this walk stops at 5 Nov. Always check that the last bar of a chart is final.

For rigour (bar construction, true range, gaps and their statistics, support and resistance as testable claims) go to M04A · 4A.1–4A.4.

See it live: the current Nifty 50 level is at https://oicharts.com/indices/nifty-50 . Note it today and place it on the year walked through above: is the index above or below its 5 Nov 2026 close, and by how much in per cent?