WHAT IS CHARTS!!......
In the earlier chapter, we have learned about charts. Now let’s discuss how charts help us & how to read charts? Charts can be made for different time horizons depending on the use the technician wants to put it to, ranging from a day to a week to a month .Accordingly; charts can be daily, weekly or monthly depending on the time horizon for which we need to apply various technical analysis tools. For many analysts, the chart of a security is the starting point of all the future analysis. Charts can provide a lot of information in a small amount of a time. Taking a look at the five year chart of a company, you can quickly determine how well shareholders have done over the period. Based on the movements represented on the chart, one can tell if a company’s share value has grown over the period or lagged. The chart reader also can determine the volatility of the company’s shares by looking at the movements on the chart. A company whose stock exhibits very jagged up-and-down movements is clearly more volatile than a company whose stock moves relatively smoothly across time. But this is only the tip of the iceberg in terms of how charts are used by market participants. In this, we'll introduce you to some of the more advanced uses of charts. A single chart has the ability to display a significant amount of information. More conceptually, charts are an illustration of the struggle between buyers and sellers. Assuming the above tenets are true,charts can be used to formulate trading signals and can even be the only tool a trader utilizes.
Learn how to read stock charts:Reading charts is an art form that can be mastered! There are many factors on a chart that go into making trade decisions. You have to be able to analyze all of these factors and come to a conclusion about whether or not to risk your hard earned money on a trade. This is what separates the novice trader from the professional. There are several things on a chart that make it worthy of trading. The questions that you want to ask yourself about the chart are: What stage is this stock in? Is this stock in and uptrend or a downtrend? Is the stock at the beginning, middle, or end of the trend? How strong is the trend? Where are the trend lines? What do the moving averages tell me? Was there a breakout recently? Are there wide range candles in the direction of the trend? Are there any gaps in the direction of the trend? Are professionals selling strength or buying weakness? Where are the support and resistance areas? What does volume tell me?
Buyers And Sellers There are only two groups of people in the stock market. There are buyers and sellers. We want to find out which group is in control of the price action now.
The picture above shows the highs and lows of the time period are called the "wicks" and the open and close form the "body". The candle itself is the "range". When stocks close at the bottom of the range we conclude that the sellers are in control. When stocks close at the top of the range we conclude that buyers are in control. If a stock closes at the top of the range, this means that buyers were more aggressive and were willing to get in at any price. The sellers were only willing to sell at higher prices. This causes the stock to move up. If a stock closes at the bottom of the range, this means that sellers were more aggressive and were willing to get out at any price. The buyers were only willing to buy at lower prices. This causes the stock to move down. Note: In the stock market, for every buyer there has to be a seller and for every seller there has to be a buyer.