Introduction to stock charts
Understanding the stock market is very important for every investor who invests in stocks. One should know the way stocks are represented, how they move, and also be able to accurately calculate and predict at what prices the stocks would settle at for that day or because of a particular news.
Technical analysis of stock charts
Studying stock charts is basically known as technical analysis. Stock charts gained popularity in the 19th century. Stock charts are represented on the basis of the fact that the past action of the stocks and their prices will have a certain impact in the future too. Each of the individual equities, markets, and indexes listed on a stock exchange have a chart each. The chart will give investors and analysts an idea about the movement of the stock from time to time. The value is represented on the XY plane, and plots of each chart can be made on the closing value of each day. In certain cases, the opening and closing value can also be represented in the chart. The summary key is placed on the top of the chart to represent the last price of the index. They can be even viewed on a weekly and monthly basis.
The left axis of the chart will always represent the time period, wherein the different months can be seen and are represented. One of the major use of the stock chart is to identify the trend. With different types of traders functioning differently, the model of the graph will also change and be interpreted accordingly. Trends can be used by a day trader to watch the change in prices in minutes to those whose investment is persisting to years. There are different kinds of trends like uptrend and downtrend. The upper trend always tends to show positive values and the downtrend will have negative values. The traders need to closely watch the change in trends to get profitable from trading in stocks.
Volumes are also important in the stock chart. They are represented as histograms in the down pane of the chart. There is a red graph and a green graph wherein the red graph is for the days when the stock is up and green graph is for the days when the stock is down. Moving average is another important technical term in the stock chart as it represents the average price of a particular stock for a particular amount of time. If the volume bar is more upright, it indicates that more trade had been done on that stock. It is said that a stock chart simultaneously makes movements in the left and right sides of the brain. One needs to have creativity and logic to make wise investment and trade.
Today, there are many free stock charts available on many reputed sites across the Internet such as www.bloomberg.com, www.reuters.com, etc. to investors as well as those who need to study it. Not only are they helpful to smaller investors who trade on the side but also to students, housewives, and the working class that needs access to free stock charts to understand how the market moved that day.