Quick Answer

The median price of a candle is the midpoint between its highest and lowest prices: (High+Low)÷2(High + Low) ÷ 2(High+Low)÷2. If a share trades between ₹500 and ₹520, its median price is ₹510. A chart may show each candle’s midpoint or an average of several midpoints. The line can help you see where recent price ranges have moved, but it cannot predict the next move.
A stock closes at ₹518. Was it strong all day, or did it recover from a sharp fall? The closing price alone cannot tell you. The median price gives you another number to check before you form a view of the chart.

What is the median price indicator?
How does it work?
How do you calculate it?
How do you read it on a chart?
What are its advantages and limitations?
Median price vs. typical price and weighted close
Common mistakes and tips for beginners
Who might use it?
Frequently asked questions

What Is the Median Price Indicator?

A candle on a stock chart shows prices over a chosen period. On a daily chart, one candle covers one trading day. On a 15-minute chart, it covers 15 minutes. Its high is the highest price reached during that period; its low is the lowest.
The median price sits halfway between that high and low. It does not show where most shares were traded. It is not the statistical median of every trade either. For this indicator, “median” simply means the midpoint of a candle’s price range.
There is a detail worth checking on your chart. Some tools connect the midpoint of each candle to draw a line. Others average several midpoints first, producing a line that changes more slowly. StockCharts uses the averaged version for its Median Price Indicator. The starting formula is the same, but the two lines can give you a different impression of a short price move.

How Does the Median Price Indicator Work?

The calculation has two parts. The first finds the midpoint of one candle. The second applies only if your chart averages several midpoints.

Choose a timeframe. A daily chart gives you one high and one low for each trading day.
Find a candle’s high and low. Suppose an NSE-listed share reaches ₹520 and falls as low as ₹500.
Calculate its median price. (₹520+₹500) ÷ 2 = ₹510
Repeat for the next candles. This shows how the midpoint changes from day to day.
Check whether your chart averages the results. A five-period average adds the latest five midpoints and divides by five. When a new candle appears, the oldest midpoint drops out.

A moving average is just an average that updates as new values arrive. Averaging can make the line easier to read, but it also makes it slower to react.

How Do You Calculate It? An Example With Indian Share Prices

These prices are made up for learning. They are not live market quotes.

Trading day	High	Low	Median price
Monday	₹520	₹500	₹510
Tuesday	₹526	₹506	₹516
Wednesday	₹530	₹510	₹520
Thursday	₹528	₹508	₹518
Friday	₹536	₹516	₹526
Following Monday	₹540	₹520	₹530

Start with the first Monday. The share’s high was ₹520, and its low was ₹500, so its median price was ₹510.

Now suppose your chart uses a five-day average of median prices. On Friday, it adds the first five midpoints:

(₹510+₹516+₹520+₹518+₹526)÷5=₹518

On the following Monday, the first Monday’s ₹510 drops out, and the new ₹530 goes in:

(₹516+₹520+₹518+₹526+₹530)÷5=₹522

The averaged line has risen from ₹518 to ₹522. In plain English, the latest five range midpoints are higher on average than the previous five.

Look at Thursday, though. Its individual midpoint fell from Wednesday’s ₹520 to ₹518. That one day moved down even though the average later moved up. This is why it helps to know whether you are looking at individual midpoints or an averaged line.

How Do You Read the Median Price Indicator?

Begin with the settings. Does your chart show one midpoint per candle, or does it average several? If it averages them, note how many candles it uses. StockCharts, for example, describes a 14-period setting for its indicator; do not assume every platform uses that setting.

Then look at more than one point on the line. If an averaged line keeps rising, the midpoints included in it have generally shifted higher. If it keeps falling, they have generally shifted lower. A line that moves up one day and down the next gives you much less to work with.

Finally, read the candles. Say a share’s median price line has risen for a week, but the latest candle closes near its low. The line shows what has happened across several price ranges; that weak close tells you something about the latest session that the midpoint leaves out.

Check volume too. Volume means the number of shares traded. A high and low tell you the limits of a candle’s price range, not how much trading happened within it.

A swing trader might use a rising line as a reason to inspect a stock, then check its recent highs, closes, and volume before deciding whether there is a trade.

Be careful with apparent crossovers. If the share price and indicator use different vertical scales on a chart, the lines can look as though they cross when their displayed values have not. Check the numbers rather than judging only by where the lines meet on screen.

What Are the Advantages?

It is easy to check yourself. You need only the high and low to calculate a candle’s midpoint.
It gives you a view beyond the close. A move near the end of trading will not change the midpoint unless it also sets a new high or low for that candle.
An averaged line can show general direction. Several midpoints together may be easier to read than a line that changes with every candle.

These are chart reading benefits. They do not mean the indicator can tell you which trade will make money.

What Are the Risks and Limitations?

The midpoint ignores the open, close, and volume. Imagine two trading days with the same high of ₹520 and low of ₹500. One share closes at ₹518; the other closes at ₹502. Both have a median price of ₹510, but they finish the day very differently.

An averaged line also reacts late because it uses prices that have already been recorded. If a stock turns sharply, the line may take time to follow. When a stock moves sideways, the midpoint may cross its average again and again without a lasting move in either direction.

There is a trading risk in treating the line as an automatic exit price. Suppose you buy 100 shares at ₹530 and plan to sell at ₹510. Your planned loss is ₹2,000 before charges. If the share opens at ₹495 after bad news and your order executes there, the loss is ₹3,500 before charges. Deciding your exit level matters, but that level is not a promise of the price you will receive.

Median Price vs Typical Price vs Weighted Close

All three measures turn a candle’s prices into one number. The difference is whether they include the close.

Measure	Formula	What it uses
Median price	(High+Low)÷2	High and low
Typical price	(High+Low+Close)÷3	High, low, and close equally
Weighted close	(High+Low+2×Close)÷4	High and low, with twice as much weight on the close

Suppose the high is ₹520, the low is ₹500, and the close is ₹518. The median price is ₹510, the typical price is about ₹512.67, and the weighted close is ₹514.50. The latter two sit higher because the share closed near the top of its range.

Common Mistakes and Tips for Beginners

Mistaking the midpoint for the most traded price. The formula uses only the high and low. It does not count trades.
Forgetting to check the settings. Find out whether your platform plots each midpoint or averages several before you try to read the line.
Acting on one turn. Compare several candles. A single rise in the line tells you very little about what comes next.
Trading every crossover. In a sideways market, repeated crosses may lead to repeated trades without a clear trend.
Ignoring how the candle closes. A share that finishes near its low deserves a closer look even if its midpoint has barely changed.
Assuming a stop price guarantees your loss limit. Decide what you can afford to risk, while allowing for the possibility of a gap or a different execution price.

Before using the indicator in a trade, try calculating the midpoints of six daily candles yourself. Compare your answers with the values on your chart. If they do not match, the chart may be showing an average rather than each candle’s midpoint.

Who Might Use the Median Price Indicator?

It can help a beginner practise reading how a share’s price range changes over time. A swing trader may use the averaged line to check recent direction, alongside the candles and other information.
It is less useful as the main basis for choosing a company to hold for years. The calculation cannot tell you about its earnings, debt, or business.

Conclusion

The median price is the midpoint between a candle’s high and low. Following those midpoints, or averaging them, can help you see how recent price ranges have changed. Before reading the line, check which version your platform plots. Then look at the full candles and volume, because the median price leaves both the close and trading activity out of its calculation. Use it to ask better questions about a chart, not as an instruction to buy or sell.