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Beginner3 min readReading Charts · 2/12

Chart Types: Line and Candlestick

The same days and the same trades can be drawn two ways. A line chart gives you the big picture fast; a candlestick chart shows what happened inside each session. Both are correct, but each hides something.

What you will learn

  • Know exactly what a line chart draws.
  • Know what a candle adds on top of the line.
  • Pick the right type for the question you are asking.
The lesson as a short video · 24 seconds · Watch on YouTube
In this lesson

The line chart

A line chart takes one price from each session, usually the close, and joins the dots with a line. That makes the overall direction obvious at a glance: is the stock rising, falling or going nowhere?

But the line knows nothing about what happened inside the session. If the stock jumped mid-day and then closed lower, the line shows only the close, as if the jump never happened.

The candlestick chart

A candlestick chart draws each session as a candle, and one candle carries four prices: the open, the close, the high and the low. The thick body spans the open and close; the thin lines above and below reach the high and low. Green means the close is above the open; red means the opposite. Reading one in detail is in the candle lesson.

Line: closing price only
Candles: four prices per day
Day six: reached 11.40 and closed at 10.30
The same eight days. The line missed the touch of 11.40 on day six; the candle shows it.
ExampleAn invented stock closed two days in a row at 10.30. On a line, the two days look alike. On candles, the first was calm, between 10.05 and 10.35, a range of EGP 0.30. The second swung between 9.75 and 11.20, a range of EGP 1.45, more than four times wider. Same close, two very different sessions.
Day A
Session range 10.05 → 10.35
Day B
Session range 9.75 → 11.20
Close on both days 10.30
One close, very different session ranges. This is what the line hides.

Which one should you use?

LineWhen your question is "what is the overall direction?" over a long period, or when comparing two stocks on one chart.
CandlesWhen your question is "what happened inside each session?": who was stronger, and how far the price went.
Watch outA line chart can look smoother and calmer than reality because it drops every move inside the session. If you plan around a specific price, check the candles: the price may reach that level mid-session without it showing on the line.

Switch between the two on a real stock

Open any stock chart on FoudaLens and switch between Line and Candles. Find a day with a long candle and see how it looks on the line.

Check yourself

1. Which price does a line chart usually draw from each session?

A line chart joins the closing prices, which is why it hides the moves inside each session.

2. A candle with a high of 8.60 and a low of 8.00. What is the session range?

Range = high − low = EGP 0.60.

Summary

  • A line joins the closes, so it shows the overall direction fast.
  • A candle carries four prices: open, close, high and low.
  • The same close can hide two completely different sessions.

Related terms

Related lessons

Educational content only, not investment advice. Companies and figures in the examples are invented for illustration.