Stock graphs are a useful tool when making decisions about an investment, including when, where and how much money to invest. Most stock graphs are designed to show changes in price, which fluctuate often, over time, which moves forward at a consistent rate. With a pencil and paper, or a simple computer program, you can produce your own graphs to show stock price vs. time.
A typical stock graph measures two things: time and price. To set up a graph, label the x-axis, or horizontal axis, time. Label the vertical, or y-axis, price. This ensures that as your line graph moves from left to right, it will represent rises (by moving up) and falls (by moving down) in the price of the stock over time. Prepare a separate graph for each stock you plan to examine in this way, since plotting two stocks on the same graph can quickly become confusing if the lines cross or merge at any point.
With your basic graph ready, you will need to select an appropriate scale for time and an appropriate scale for price. If the stock you're examining has a relatively high price, it may not make sense to start with a value of zero at the bottom of the chart. A price below the lowest price you plan to include on the graph, and a price just above the highest recent price, should serve as a guide for your scale. Mark these locations on the y-axis, then add markers and labels for values between them. For example, if the stock you're looking into has ranged from a value of $15 to a value of $75 in the past year, you can use a price scale with $10 at the bottom, $100 at the top and $10 increments marked and labeled between them.
To select a time scale, decide how far back you want to look when examining a stock's historical price. You may choose to go back one year, six months or one month for an even more recent view of its changing price. Label the point where the x- and y-axes meet with the starting date. Label the rightmost point on the horizontal axis with the most recent date for which you have data. Label dates between these two extremes, using the same method as with the price scale.
Plotting Points and Drawing Lines
Use whatever data you have on the stock's price to plot points on your graph. Each point needs to correspond to the exact price on a specific date. Stock quotes usually reflect the price at the end of trading on the date listed. Plot as many points as you have data for and can fit on your graph. Complete the graph by connecting the dots with thin lines, from left to right. The resulting line graph will show increases and decreases in the price of the stock over the time you measured. Steep lines indicate rapid price changes, while more gradual slopes show slower price change.
Video of the Day
- Hemera Technologies/Photos.com/Getty Images