Understanding price graphs

A price graph shows the change in price for an investment over a period of time. When investing online, price graphs can be an important part of your research into a new market or stock. Whether you’re a beginner or an expert, all investors can use them.

Price graphs can be used to check the past performance of a stock and assess the level of the stock’s price volatility. This could help you determine whether the investment is right for you and how comfortable you are with the level of risk involved.

If you are investing in a share of a single company, price graphs can give you access to the full performance history of a stock. Think of this as a footprint, used to research the lifecycle of a stock and how it has performed in the past.

Let's break it down

It is important to understand how to read a price graph. There are many types of price graphs, but this graph is commonly shown when researching investments online. Let’s break down this price graph for the FTSE 100 index fund.

1. This is the price of the investment (which is a stock/security on the London Stock Exchange). Prices often fluctuate during trading hours; the price of this stock is £8,924.91 on July 11, 2025. This is how much it would cost to buy one of every share in this fund on that day. 

2. This section allows you to look at the performance of the investment over time. It is important to keep in mind the longevity of the investment and how it fits into your long-term strategy. Using this section will allow you to identify key trends such as crashes, spikes, and assess the volatility of a stock.

3. This is the name of the stock; you may notice that there is an abbreviation under the name. Let’s look at the FTSE 100 Index as an example. Just underneath, you’ll see the abbreviation ‘FTSE: FSI’. This is called a stock ticker symbol, which is a unique symbol of letters assigned to a stock for trading.  

These symbols are used to easily identify investments in lots of different places and will often relate to the company. You may often see these letters following a dollar sign on social media, within the trading apps you use, or in articles online. These can be a handy way to quickly find information when you’re researching an investment. Be wary as this information could also be used to generate hype. It’s important to double check that the information is correct as some investments use the same symbols as others. 

Always double check that the information you’re looking at relates to the investment you’re researching and double check your sources of information before you purchase an investment.

4. This section is where you can analyse the data from this price graph. Here you’ll find the peaks and dips in prices throughout the day, month, or year. In this example, the x-axis shows the day of the week, and the y-axis shows us how much the stock price was at this time. This price often fluctuates throughout the day and can be used as a way of assessing how volatile a specific stock is.

Hype is growing

Hype is everywhere. It can come from the promotion of products and services online or from your mate showing off something new they’ve bought. Have you ever brought a product online without doing much research into it and then, when you finally receive the product, it turns out to be not as good as you expected?

Let’s apply this perspective when looking at price graphs.

When lots of people are hyping up an investment, it’s common for people to start sharing price graphs that show a sharp rise or a quick jump in value to create a sense of urgency and encourage you to invest quickly before you miss out on the next price rise.  

However, data in these graphs are not always playing in your best interests and sometimes the data can be presented to create an inaccurate impression of the stock’s performance. These graphs often highlight the good parts (the spikes and gains) without showing the full picture, what drove these gains, or highlighting the risks involved. This can be used as a hype tactic to get people excited and ready to invest right away, mostly without doing any additional research to understand what they’re investing in.  

Sources presenting performance charts are required to display a disclaimer, informing users that past performance is not a reliable indicator of future performance. This is often overlooked and could impact how you assess the price graph. There is no correlation between a stocks past performance and future performance. So, it’s important to be wary of sources who claim to predict the success of a stock. 

So, while some price graphs can look promising, it’s smart to take a step back to research the investment so that you don’t get caught up in the hype. You should always do your own research through a variety of trusted sources, when determining whether an investment is right for you.

Dodge the hype and escape FOMO

Here are some tips when using price graphs, so you don’t get caught up in the hype.

• Don’t rely on price graphs as your only source of reliable investment information – instead, use a range of sources.  
• Make investment decisions that are right for your personal circumstances. Remember, your situation isn’t the same as your mate’s – make investments that are right for you. Find out how to tell whether an investment is right for you here: Is it the right investment for you.
• When reading price graphs, remember to keep in mind that stock prices are constantly changing. The price you see an hour ago may change by the end of the day, don’t allow this to rush you into buying a stock.