What is a line graph?
A line graph (also called a line graph or line graph) is a graph that uses lines to connect individual data points that display quantitative values over a specified time interval. Line charts use “markers” of data points connected by straight lines for easy viewing. Used in many fields, this type of graph can be very useful in describing changes in values over time.
Key points to remember
- A line graph connects individual data points, which typically display quantitative values over a specified time interval.
- Line graphs consist of two axes: the x axis (horizontal) and the y axis (vertical), graphically designated by (x, y).
- By investing, in particular in the field of technical analysis, line graphs are quite informative by allowing the user to visualize trends, which can greatly help him in his analyzes.
Understanding line graphs
In finance, line graphs are the most used visual representation of values over time. They are frequently used to represent changes in securities prices, corporate income sheets and the history of major market indices. They are also useful for comparing different titles. By investing, in particular in the field of technical analysis, line graphs are quite informative by allowing the user to visualize trends, which can greatly help him in his analyzes.
Despite the benefits, there are limits. For example, line graphs often lose clarity when there are too many data points. In addition, the apparent degree of change can be manipulated visually by adjusting the range of data points on the axes.
Construction of a line graph
Line graphs consist of two axes: the x axis (horizontal) and the y axis (vertical), graphically designated by (x, y). Each axis represents a different type of data and the points at which they intersect are (0,0). The x-axis is the independent axis because its values do not depend on any measurement. The y axis is the dependent axis because its values depend on the values of the x axis.
Each axis must be labeled according to the data measured along the axis and divided into appropriate increments (for example, day 1, day 2, etc.). For example, if you measure changes in a stock price for the previous two weeks, the x-axis would represent the time measured (trading days during the period) and the y-axis would represent the stock prices .
When using line charts to track the price of a stock, the most commonly used data point is the closing price of the stock. On the first trading day, the stock price was $ 30, giving a data point at ($ 1.30). On the second trading day, the stock price was $ 35, giving a data point at ($ 2.35).
Each data point is plotted and connected by a line that visually shows the changes in values over time. If the stock value increased daily, the line would tilt up and to the right. Conversely, if the stock price fell steadily, the line would tilt down and to the right. Line charts can be constructed manually or using software such as Microsoft Excel, which greatly improves the speed and accuracy of the final product.