histogram

In the finance world, histograms are very useful because they indicate where the action is. In our example, note that the longest bar relates to the $27.50-$32.50 price range, meaning that the most trading volume in this stock occurs when the shares are trading between $27.50 and $32.50. Obviously, lots of trading volume also occurs in the $32.50-$37.50 range, but relatively few buyers and sellers want to trade when the stock is in the $42.50-$47.50 range or anywhere north of $70.

Accordingly, a histogram in this context could help analysts try to predict when the stock will encounter support and resistance -- that is, when a stock will reach its top and bottom price. This in turn helps analysts decide when to buy and when to sell. It is important to note, however, that histograms are just one of many charts that analysts use.