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Saturday, July 18, 2009

How to Understand Technical Analysis Chart

What is the secret to make consistent profit in stock trading no matter you are day trading, swing trading, or long-term investing? The answer is technical analysis.

1) Trading in the stock market can be very profitable or painfully unprofitable. With understanding of technical analysis, it will allow you to make better decision on entering or exiting a position.

2) Learn to read charts

Learn how to use technical analysis effectively and profitably. Technical traders only trade when they see a particular indicator or pattern in chart.

ChartSchool
http://stockcharts.com/school/doku.php?id=chart_school

3) Candlestick Chart

Compared to traditional bar charts, many traders consider candlestick charts more visually appealing and easier to interpret. Each candlestick provides an easy-to-decipher picture of price action. Immediately a trader can see compare the relationship between the open and close as well as the high and low.

Introduction to Candlesticks
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:introduction_to_cand

Candlestick Pattern Dictionary
http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:candlestick_pattern_

4) Support and Resistance

Support and resistance are considered critical indicators for price continuation, stalls, or reversals. These are visual charted tops and bottoms of a stock.

5) Be consistent with your rules for trading

This is essential for profitability. You must have systemic rules, rules for your trading game that you must follow. These rules tell you when to get in and when to get out. Follow these rules strictly even if it means taking a loss now and then.

Trading Strategies
http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies