In the context of stock, the line graph refers to the closing price of each period. For example, you set your graph to show the daily price, which is — how the graph is moving in each day, perhaps in a period of one month.
So, what you’re basically seeing is the closing price for each day in that month. In simpler terms, for this graph, you will see how the price of the stock is doing each day, based on the last price of the stock each market day.
For example, based on the picture above (we use Apple as an example, NASDAQ: AAPL), you see that on October 10th, 2022, the price is at $140.01. What this means is that on October 10th, when people are done with their day and the stock market is about to go to bed, Apple’s price is at $140.01.
Pros of Line Graph
It is good for you to get a general view of how the stock is doing for reporting, or to see the historical performance of the stock. This is due to the fact that it tells you how well the stock is performing each day.
Thus, if you must do a report to see how well Apple is doing after Tim Cook took over, for example, you can simply look at the line graph to see how the stock price moves.
Cons of Line Graph
This is not the best graph if you’re doing day trading*. Why so? That is because a line graph only tells you how the stock is doing when the market close.
Of course, you’ll get a glimpse of what’s going on if the stock suddenly closes at a huge downturn, but even that is not sufficient for you to truly understand the market sentiments to ensure you’re putting on a winning bet.
*Day trading refers to investors who buy or sell assets on a day-to-day basis to make a profit from short-term price movements.