The Use of Stock Charts As a Guide for Trading in the Stock Market
The stock chart is, for many stock market traders, an important tool for assessing the activity of a stock or the overall stock market in general.
The stock chart in most representations is a graph showing price, trading volume and possibly other related market activity, that has taken place over a span of time, usually for a period of time in the past until the present time.
The stock chart shows a large amount of related data about its subject stock that can convey valuable information to those who are able to analyse and interpret their meaning or implication.
A primary objective in chart analysis is to help in the prediction of future stock movement.
A wide variety of patterns of stock price movement of the past trading activity can be seen to repeat themselves over time and many of those recognized patterns have been noted and documented.
Together with a number of typical price, volume, and other factors they form a basis for stock chart interpretation and analysis enabling the stock to be a tool of prediction, although not always reliable and not scientific.
Opinions differ on interpretation but the abundance of accurate information of past activity that can be conveyed in a relatively simple graphic form can be used to good advantage to aid trading decisions for some stock traders.
Many traders will not work without using stock charts.
A common use of the stock chart is to quickly identify price levels at which to enter or exit a stock position.
This can often be determined, for those who trade with the aid of stock charts, when levels of resistance and support are penetrated -- these can be more easily seen by examining a chart of the candidate stock.
Trading and investing in stocks The trading of stocks is usually a much more speculative and short term approach to stock market involvement than the more conservative investment approach that requires a farther out horizon.
Buying stocks for investment purposes requires a consideration of more fundamental aspects of a stock and its long term growth prospects, and its profitability and dividend income, that are much more important than when investing and speculating for the near term only -- that usually requires an appreciation in price over, typically, less than six months.
The stock chart is a useful reference for the short term trader but it plays a less important role in the long term investment decision making process.
The stock chart in most representations is a graph showing price, trading volume and possibly other related market activity, that has taken place over a span of time, usually for a period of time in the past until the present time.
The stock chart shows a large amount of related data about its subject stock that can convey valuable information to those who are able to analyse and interpret their meaning or implication.
A primary objective in chart analysis is to help in the prediction of future stock movement.
A wide variety of patterns of stock price movement of the past trading activity can be seen to repeat themselves over time and many of those recognized patterns have been noted and documented.
Together with a number of typical price, volume, and other factors they form a basis for stock chart interpretation and analysis enabling the stock to be a tool of prediction, although not always reliable and not scientific.
Opinions differ on interpretation but the abundance of accurate information of past activity that can be conveyed in a relatively simple graphic form can be used to good advantage to aid trading decisions for some stock traders.
Many traders will not work without using stock charts.
A common use of the stock chart is to quickly identify price levels at which to enter or exit a stock position.
This can often be determined, for those who trade with the aid of stock charts, when levels of resistance and support are penetrated -- these can be more easily seen by examining a chart of the candidate stock.
Trading and investing in stocks The trading of stocks is usually a much more speculative and short term approach to stock market involvement than the more conservative investment approach that requires a farther out horizon.
Buying stocks for investment purposes requires a consideration of more fundamental aspects of a stock and its long term growth prospects, and its profitability and dividend income, that are much more important than when investing and speculating for the near term only -- that usually requires an appreciation in price over, typically, less than six months.
The stock chart is a useful reference for the short term trader but it plays a less important role in the long term investment decision making process.
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