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.

If you're thinking about investing, you can use price graphs 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're 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, showing you the full life cycle of a stock and how it has performed in the past.

When people talk about investments online, they often share screenshots of price charts. While these can be useful, they don't always tell the whole story. The timeframe or data shown may be selected to support a particular viewpoint rather than provide the full picture. Before drawing conclusions based on what you've seen online, it's worth checking how a stock has performed over the past several years. And remember, past performance is not a reliable indicator of future results. 

Let's break it down

Learning how to read and understand price graphs, is a useful skill to develop as an investor. 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 see these letters following a dollar sign on social media, within the trading apps you use, or in articles online. This can be a handy way to quickly find information when you’re researching an investment online. As with any information you come across while researching, it's always worth taking a moment to verify what you find. Some investments share similar symbols, so a quick double-check ensures that you're always working with the right information and making confident, informed investment decisions.

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.  

It's worth knowing that graphs shared in these situations don't always tell the full story. They can highlight the most impressive moments (like gains), without showing what drove those gains, how the stock has performed over a longer period or what risks might be 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.  

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.