Investing in the stock market today can be extremely difficult if you do not have the correct tools to help you. There are many signals that one must understand. These different signals will help you understand what direction a stock will move in, and will help you make the most appropriate decision while trading stocks. There are many tools and many methods of getting this vital information, but the most important has to be the stock chart. Chart analysis enables you to see what happened in the past, present, and helps you predict what may happen to a stock in the future.
are bar charts or OHLC bar charts, line charts, point and figure charts and candlestick charts. All provide information, but some provide more detailed information than others. To perform technical analysis on a stock pick requires that you have as much information as possible. The simplest of the stock charts is the line chart. It shows a line connecting the dots of the closing price each day. This is useful for beginners who need only information on the closing price at a glance. It is not suitable for predicting trends.
The Bar chart is more complex than a line chart, and typically shows a vertical line or bar representing each day of trading. The length of the vertical lines will show the highs and lows of the stock during the day. Short horizontal ticks going left and right off the vertical line will show the open and close price. In this stock chart, the closing price is usually the tick on the right, with the opening tick being the open. The vertical lines may also be colored to indicate if a stock has risen (Green) or fallen (Red). This chart is good for stock picking as it allows you to see how the price moves through the trading day. The bar chart can be difficult for beginners to understand.
The candlestick chart is a more superior tool for technical analysis. It is easy to read and interpret, while providing very detailed information. Each trading day is represented by a candle with two lines protruding from the top and bottom end of the candle body. These lines are called shadows. The shadows represent the highs and lows of the stock price. The top and bottom of the candle body is the open or closing price. The candle may be white or black in color. A Black candle being bearish and a white candle bullish.
This stock chart is the most tool for predicting swings in the stock price, and is good for beginners to get an overall picture of what a stock is likely to do.