Line Graphs
Line graphs are the most popular form of graphs used in the financial world, and are fairly easy to understand. Data is presented on two axes, the Y axis, and the X axis. The X axis typically represents an independent variable such as time. The Y axis normally represents an dependent variable, which in most cases would be price. Thus, you will get such graphs:
Information regarding patterns and trends can be found in the next chapter: 3.1 Economic trends
Japanese candlesticks
Japanese candlestick graphs are a special form of financial graphs that is used because of it's ability to provide more detail.
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Due to the fact that markets have regular openings and closing times, and that prices can fluctuate, the Japanese candlestick aims to show how much a price has changed over a period of time (usually a day). Thus, we can see how a stock's price has changed over a day of trading.
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Instead of using lines, a Japanese candlestick uses a rectangle to represent the range of values at which a stock price has achieved over a day of trading. A candlestick consists of two parts, the Body and the Wick, similar to an actual candlestick.
The Body of the candlestick is determined by the upper bound and the lower bound of the rectangle. This, in turn, is represented by the stock's opening price at the start of the day and closing price at the end of the day.
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Besides a candlestick, there are usually two "Wicks", each representing the two extremes in prices within a day. These are indicated by the Upper Shadow and the Lower Shadow.
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Together, a candlestick shows the movement of a stock's price within a day.
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Additionally, to determine if a stock's price has gone down or up, one can use the colour of the candlestick. If the colour of the candlestick is green, it is said to be "Bullish" and the price of the stock has gone up.
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If the colour of the candlestick is red, it is said to be "Bearish", and the price of the stock has gone done.
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Here is an example of a candlestick graph:
