A chart is a picture of what already happened. Learning to read it calmly is the first skill of any trader or investor.
THE 5-YEAR-OLD VERSION
A chart is a diary of prices. The left side is the past, the right side is today, and the height is the price. It tells you what happened. It cannot tell you what will happen next.
Two common chart types
Line chart: joins each day's closing price. Clean and good for the big picture, like the charts in the previous lessons.
Candlestick chart: one "candle" per time period (a day, an hour) showing four prices: open, high, low, close. It shows how the day moved, not just where it ended. Next lesson covers how to read one.
Daily candles for the Nifty 50, 10 Feb to 24 Apr 2020: the Covid crash and the first bounce. Green candles closed above their open, red candles below. Source: daily closing levels of the Nifty 50 price index (NSE Indices), as published by Yahoo Finance, 17 Sep 2007 to 13 Apr 2026. The price index leaves out dividends (roughly 1% to 1.5% a year), so total returns were somewhat higher. Past performance does not predict the future.
Time frame changes the story
The same market looks calm on a 10-year chart and terrifying on a 10-day chart. A long-term investor and a day trader look at the same prices and see different pictures. Always know which time frame you are looking at, and match it to your own plan.
Linear versus log scale
On a linear scale, the gap between 5,000 and 10,000 looks the same size as the gap between 20,000 and 25,000. But one is a 100% move and the other a 25% move. On a log scale equal percentage moves take equal space, so it is better for long histories. The first chart in this course used a log scale for that reason.
What a chart can and cannot tell you
It can show you the trend, how bumpy it has been, and where prices turned before.
It cannot tell you why the price moved or what happens next. Treat patterns as descriptions, not promises.
Remember
Line charts show the big picture, candles show how each period moved.
Time frame changes how risky the same market looks.
Log scales show equal percentage moves as equal distances.
OverlapIQ Learn is for education only. It does not recommend buying, selling or holding any security, and nothing here is investment, tax or legal advice. The replay lab uses virtual money. Charts and figures use daily closing levels of the Nifty 50 price index (NSE Indices) as published by Yahoo Finance; the price index excludes dividends, and past performance does not predict the future.