Stock Chart Basics from Better Trades
Anyone wishing to make money by buying or selling stock should be familiar with stock charts and how to read them. The
ability to interpret the data offered in a stock chart can be the difference between making a profit and taking a loss,
which forms the basis of making better trades.
The stock chart provides a wealth of information. Packed into the area the size of your computer screen is contained the
complete history of the stock under consideration. You can see how high the stock has traded and how low it has dropped.
You can examine trends to see whether it is headed up or down. You can crosscheck the stock with news, such as earnings
announcements, to see if there was anything specific that caused it to move.
Traders who rely heavily on stock charts are considered technical traders. (Other traders, known as fundamental traders,
rely on other information such as PE ratio to make their decisions.) But trading without looking at a stock chart would
be like starting on a hike without a topographical map. It just doesn't make much sense.
Looking at a stock chart tells us where the stock is likely to go. It is true that stocks are inanimate objects and don't
have emotions. But the people who trade the stocks do have emotions and are likely to buy and sell the same stocks over
and over. And those who buy the same stocks are likely to buy and sell at the same levels.
A novice trader will learn the price
chart is considered the ultimate tool. It is required in order to draw
support and resistance
lines, the building block of chart interpretation. The chart is available in
lines, bars and candlesticks,
depending on a trader's preference. Traders can use
trend lines and assorted indicators
to locate the most profitable places to enter or exit trades, which they can watch
unfold while watching
intraday charts.
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