Beginner's Must-Know | How to Read Stock Charts? Mastering These Core Elements Is Enough

Market analysis is not about frantically staring at the screen, but about extracting truly meaningful signals from chaotic data. Every day, the market speaks through prices, trading volume, and capital flow, and what we need to do is learn to “listen.” For beginner investors, instead of being overwhelmed by complex indicators, it’s better to first grasp the core logic of market viewing — this is the first step to avoid detours.

Starting from the most basic tables｜Stock codes, prices, and trading volume at a glance

Open any market analysis software, and what immediately catches the eye is a “data table,” filled with dense numbers that can initially seem confusing. But the most important elements are actually these:

Stock Code and Name
The code is like the company’s ID card. Taiwan stocks usually have a 4-digit number plus “.TW” (e.g., 2634.TW), while US stocks are 2 to 6 letter alphabets (e.g., TSM for Taiwan Semiconductor). This coding system helps prevent order errors caused by company name confusion, especially when the same company trades on different markets.

Stock Price
This is the heartbeat of trading — each transaction updates the stock price in real time. The opening price comes from the first trade during pre-market auction, and the closing price represents the last trade of the day. The logic of US and Taiwan markets is consistent here, just with different trading hours and rules.

Trading Volume
Volume reflects market activity. Higher trading volume indicates more active capital turnover and greater investor attention. Large volume combined with price movements often signals that major market decisions are brewing.

Price Change Percentage
Transforming price changes into percentages allows for intuitive comparison regardless of stock price levels. Taiwan stocks have a 10% daily limit (涨停,跌停), but US stocks have no such limit — a key difference between the two markets.

Advanced observation｜Taiwan’s three major institutional investors’ net buy/sell and capital flow

The “three major institutional investors” in Taiwan — foreign investors, trust funds, and proprietary traders — their actions deeply influence the market trend.

Foreign Investors hold the most capital, accounting for about 30-40% of trading volume. They usually operate from a long-term perspective and serve as market barometers. Continuous net buying by foreign investors often lifts the market.

Trust Funds are domestic fund companies, focusing on quarterly performance rankings, mainly engaging in short- to medium-term trading. The “window dressing” near quarter-end is often closely related to their active positioning.

Proprietary Traders include general proprietary trading (short-term profit from price differences) and hedging proprietary trading (risk management). Their trading patterns are the most flexible and often produce reversal signals.

After each trading day, the buy/sell net figures released by the stock exchange are worth paying attention to — but remember, even institutions can be wrong. The safest approach is to combine these signals with fundamental and technical analysis.

Candlestick charts are the most straightforward storytellers

Candlestick charts (also called K-lines or Yin-Yang lines) are the fundamental language of technical analysis. Each candlestick contains four key prices within a specific period: open, high, low, and close.

Red candlestick (Yang line) indicates close > open, signifying an upward move; Black candlestick (Yin line) is the opposite. The body shows the basic price change, while the upper and lower “shadows” reveal intra-period volatility — a true reflection of market psychology.

By observing candlestick patterns continuously, you can quickly grasp the trend and identify potential turning points. Even if you don’t have time to monitor the market live, analyzing the candlestick chart after hours can reveal the battle between bulls and bears for the day.

Fundamental analysis｜Understanding a company’s true nature through financial reports

Fundamental analysis requires patience and meticulousness. You need to deeply study the company’s operations, industry outlook, and financial health to judge whether the stock is overvalued or undervalued.

Income Statement answers “Is the company profitable?” Indicators like revenue, gross margin, and net profit margin reveal profitability and operational efficiency.

Balance Sheet answers “Is the company financially solid?” Ratios like current ratio and debt ratio directly reflect financial structure and debt-paying ability.

Cash Flow Statement answers “Does the company have real cash?” This is the most overlooked but crucial statement — because ultimately, a business survives on tangible cash flow.

Comparing multiple quarters or years of financial reports can systematically reveal long-term trends. Valuation metrics like Price-to-Earnings (P/E) ratio and Price-to-Book (P/B) ratio are also important references for assessing whether a stock’s price is reasonable.

Technical analysis｜Using indicators and patterns to forecast price movements

Technical analysis focuses on the past to predict the future. It studies historical price and volume trajectories, using candlestick patterns and technical indicators to find regularities.

Moving Averages determine trend direction; a golden cross signals a buy, a death cross signals a sell.

RSI Indicator measures buying and selling momentum; >70 indicates overbought, <30 indicates oversold. Divergence between RSI and price can serve as a warning of potential reversals.

MACD Indicator combines trend and momentum, using DIF line, MACD line, and histogram to judge strength and trend reversals.

Bollinger Bands measure volatility; widening bands suggest increased volatility and possible trend initiation, narrowing indicates consolidation.

Technical indicators require experience to master. Many trading platforms automatically integrate these analyses and display buy/sell signals, which are useful for beginners as references.

Choosing the right tools to double your market analysis efficiency

Good analysis software enables faster and more accurate information access. Reputable trading platforms usually provide comprehensive market data and quotation pages, ensuring quality and timeliness. Many also offer free technical analysis tools, economic calendars, and market sentiment indices.

Besides trading apps, several dedicated info websites are worth bookmarking:

• Yahoo Finance (most timely US market info)
• Investing.com (multi-market data)
• TradingView (chart analysis tools)
• Sunchu Stock Market (professional Taiwan market analysis)
• Financial Report Dog (financial data interpretation)
• Chip Data K-line (Taiwan stock chip analysis)

Master the logic, not just memorize indicators

The essence of market analysis is not about memorizing indicator formulas but understanding the logic behind market language. Price, volume, capital flow, financial data — every signal tells a story, and your job is to learn how to interpret it.

Start with basic tables, then gradually delve into candlestick charts, institutional movements, and fundamental analysis. Finally, integrate technical tools to develop your own analysis system. When you can quickly extract key signals from chaotic data, you truly master the art of market viewing.

While US and Taiwan markets have their unique features, the core methodology of analysis is universal. Continuous practice, observation, and regular review are essential to evolve from a beginner to a trader who can rely on market analysis for income.