Basic Tips on Trading Stock Charts

The Basics of Stock Charts for Dummies

Take a look at this excellent video on stock charts by the Old School Chartist. It is aimed at the very beginners amongst us, so if this is not you  then you may wish to skip it. In the video he gives a very good and easily understood explanation of the wedge pattern and the difference between logarithmic charts and arithmetic charts and why it is very important to use logarithmic charts when looking at stocks. Any charting package (whether free or paid for) will allow you to switch between the two diferent charting methods just by clicking on a button.
In the video he mentions a book about charting which he recommends by Robert Edwards and John Magee Technical Analysis of Stock Trends
it costs around $60 but is well worth it, alternatively there is a cheaper charting book on the right-hand side of this page.

If you are more of a long-term investor rather than a short-term  trader then you might want to take a look at what stocks Warren Buffett has been buying - Warren Buffett's Latest Stock Buys

For more about charting see - How to Trade Stocks Online

Technical Analysis of Stock Trends


Stock Market for Beginners - Charts

Stock Market for Dummies - Stock Chart Analysis Video

Check out this video on the SnP market charts from the Old School Chartist

Basically OSC has been saying for a while now that if the SnP breaks down below a certain line around 1245 then it will be heading down another 75 - 80 points. Well, that support of around 1245 was broker yesterday (Wednesday) and it loks like we are heading for another down day today (the FTSE is down around 100 points so far today and the DOW futures are also pointing down).

For beginners to stock trading and stock charts it is very useful to see how traders with more experience interpret stock charts. Stock charts are not infallible of course, and neither are the interpretations of them, but there is a widely held belief that the news comes out in the charts first. Primarily because people in the know - generally institutional traders - place their positions before everyone else gets to join in.

This institutional trading can be seen in the charts and when the rest of the traders join in this merely accentuates a trend that was already there.

For a slightly more detailed look at charts and why professional stock and forex traders use them, check out - stock charts for beginners

For a VERY detailed explanation of charting for traders of all levels then you can download this 272-page ebook from Amazon Getting Started in Candlestick ChartingCandlestick Charts Ebook


Charting for Beginners? Support-Resistance

How to Trade Stocks using Charts - Support and Resistance

Actually, support and resistance levels are not just for beginners to stock trading. Many professional stock traders time their shares buying and selling on nothing more complicated than support and resistance levels.

Take a look at this excellent video by 'old school chartist' for a detailed explanation on what support and resistance levels and why they work.

Basically stock charts are not just random lines on a screen, they work as a trading strategy because they reflect the behavior of crowds. When traders expect something to happen, they make it happen by behaving in a certain way and so the charts become self-fulfilling prophecies.

For more information on support and resistance check out this earlier post - how to trade stocks - one easy strategy

Time to Buy Stocks Finally?

Stock Trading - Time to Buy Stocks At Last?

Investment institutions have been buying stocks over the last month for the long-term. Could it be that we have seen the bottom in the recent downturn? It's beginning to look that way, although this week could be volatile given the news everyone is waiting for out of Europe on Wednesday, which is quite likely to disappoint, as usual.
Timing is money when it comes to stock trading

So we might see a pull back of around 5% or so in which case I might finally decide it's time to get back into the stock market by actually buying some stocks !

See the video from 'stock trading master' in which he explains everything in detail and in a very graphic manner, that is easy to understand.

Plus don't forget that the 4th quarter of the year is usually the best for buying stocks.

See also - popular posts - stock charting for beginners

Stock Trading Video Insights

How to Trade Stocks Using Charts

For the absolute basics about how to trade stocks click here - how to trade stocks online

Stock trading master is an interesting guy, his analysis of stock charts is easy to follow and a genuine education. He also tells you why you can't trust stock trading subscription newsletters (fairly obvious really but it bears repeating). Here are his ideas for the next week's trading. The markets are still in a downtrend and fell a lot last week ! So much so they made the news again.

Personally I have been waiting for the markets to drop back for a long time and maybe finally we will get it. One trader on CNCB said 1080 on the S+P is a key level and he expects us to see it soon. So keep an eye out for 1080 and then decide what to do next.

The markets in Europe appear to be bouncing yet again, but for how long, Greek is finally well on its way to defaulting so just what effect will that have on the markets? We shall see, but bear in mind that European politicians are totally hopeless, they haven't got a clue what to do and are just hoping their bank accounts will be OK and they might still be in a job when this whole mess finally works itself out.


How to Trade Stocks One Easy Strategy

How to Trade Stocks - Make Money using just Support and Resistance - a Video

For the absolute basics on trading stocks see - how to trade stocks online . If you are looking to make money from the stock market using the easiest stock trading strategy then remember that many professional traders use nothing more complicated than the notions of support and resistance.

The video below is very clear but basically you just need to identify a stock that is trading in a channel - see when it hits its support level then buy it and wait till it moves back up and hits its resistance level, at which point you sell it. This applies to stocks but it also applies to the market as a whole if you just want to trade the indices.

Stock trading info. for beginners and experts

A trend can be up, down or sideways but as long as you can correctly identify the channel then you can trade by buying at support and selling at resistance. This is clearly a short-term trading method but if you get it right then it can be highly profitable and also easy to follow. Lots of professional traders just use this as their basic method. Remember though that you need to have 'stop losses' in place i.e. you need to ensure that if the stock continues tof all after you have bought it then you get out of the trade if it falls 5% or so. You make a loss but you don't get wiped out. In stock trading it is important that you only lose battles not the war.

Trading stocks is all about calculating the risk reward ratio, you can't possibly win every time, but you must make sure that your winners make you more money than you lose on your losers.

If you want to make your trading slightly more complicated then you can combine support and resistance with moving averages. In short-term trading it is not a good idea to buy a stock that is below its 200 day moving average and it is also not a good idea to by a stock when its 5 day moving average is pointing down - for details see this video on moving averages.

For a video explaining trend lines see - stock trading using trend lines


Stock Charts for Beginners Video

Stock Charts for Dummies - See video below

NB : For the absolute basics on how to trade stocks - click here for the no-nonsense no frills lowdown ---> how to trade stocks online

Hurricane Irene has been and gone leaving a lot of damage in its wake. The damage is expected to total around $10 billion and some say it will negatively affect insurance companies, but in fact, allegedly, it is just the opposite. Large events like this one actually allow insurance companies to increase their premiums ! So long-term people see them as good. That's money for you.

Stock trading master's videos at and youtube are really good as an introduction to stock charts and how to trade stocks, not because they are basic stuff but because they are videos from a guy who clearly knows about stock trading and the significance of the various charts and indicators. He also explains it all in a way that beginners to stock trading can understand and follow.

He says we are still in a downtrend in the stock markets, which is good because I agree with him. We have had a slight bounce in recent days but I expect the downtrend to resume, especially given the mess that is Europe at the moment, I can't see that being cleared up anytime soon.

Bernanke is also going to speak which could spook the markets even further.

One stock that I think could do well in the long-term is Amazon, because of the rapid rise in ebook sales - want to be a best-selling author and millionaire ? Then self-publish an ebook on Amazon - here's how it is done - ebook best-sellers and here's a survey t hat shows how many people actually make money writing and publishing their own ebooks for the Kindle -

Stock charts for dummies video

For further info. on how to interpret stock charts see - stock charting basics and how to trade stocks


Stock Market Heading Down or Up ?

How to Trade Stocks for Beginners - How Far Can the Stock Market Drop?

The DOW is down another 430 points to 11,011 after being at 12,600 just a few days ago. But how far can the markets fall? Some traders think we might be heading back to the lows of March 2009 whereas others think this recent fall represents a good buying opportunity. So what's a trader to do?

First of all if you are a beginner this is a very dangerous time to be considering buying stocks. It is not a good time to be a hero, or as Art Cashin likes to put it "it is usually the second mouse that gets the cheese". So don't stick your neck out unless you are absolutely certain what is going to happen next. Don't forget that Standard and Poors have just downgraded US debt for the first time since 1917 !

For one take on what may happen take a look at Oscar in the following video (if you are in a hurry you can skip the first five minutes). He is not convinced that the markets are as bad they appear to be, and points out that we may in fact be at a crucial support level, if this level holds then we may soon recover from this recent drop.

Professional traders themselves don't know which way these markets are headed - some saying we might rocket back up and some saying we plunge even further today. So very risky trading times!

Personally I am rather pessimistic and am waiting for the markets to fall even further - but Oscar makes an interesting argument and I will be watching market developments with interest over the next few hours and days.


How to Trade Inverted Hammer Candlestick

How to Trade Stocks for Dummies - Trading the Inverted Hammer and the Shooting Star Candlesticks

NB : For the basics on stock trading - click here for the no-nonsense info. --- how to trade stocks online

If you are just starting out trading stocks, this video gives a very good description of how to trade both the inverted hammer and the shooting star candlesticks

For more detailed information on the inverted hammer pattern see - inverted hammer candlestick for the shooting star pattern see - shooting star candlestick - for the basics of stock trading online for beginners see - how to trade stocks


Investing for Beginners - One Trading Strategy

Investing for Dummies - Trading Moving Averages

As we have said before - stock charts for beginners - it is important if you are just starting out stock trading to understand the basics of stock charts. Why is it important ? Because professional traders use charts and if you don't understand them you will be at a disadvantage.

One of the basic concepts involved in stock charting is the 'moving average'. This is the average of a stock price over a given period of time - often 50, 10 or 200 days. Any financial site such as Yahoo will show you the moving averages, there's no need to work them out for yourself.

The aim as can be seen from this video from informedtrades is to buy a stock when it moves above a given moving average and to stick with it until it drops back down below the moving average again. This can be quite profitable if the stock is in an uptrend.

Another strategy is to track two moving averages such as the 50 and the 200 day - and to buy the stock when the shorter time frame average crosses over the longer time frame average while they are moving up. Some people refer to this event as a 'golden cross'.

If you are new to stock trading then these concepts may seem fairly alien, but a look at the video will show what is meant.

Moving averages are very basic indicators in stock charting but very widely followed by professional traders. Many traders for example will not buy a stock if its stock price is below its 200 day moving average, but once it crosses back over again then that could be a good time to start buying.

Swing traders also do not like buying a stock if its 5 day moving average is pointing down, so that's worth checking out too before wasting your cash on a risky gamble.

Apart from moving averages, another basic indicators that many stock traders use is that of support and resistance - see here basic stock trading strategies


Basic Investing in Stocks for Beginners

Investing in Stocks for Dummies - Buy Low Sell High

How to trade stocks when you are a total beginner to the stock market?

Well, first things first, you need a trading account with an online stockbroker. They are all pretty much the same so go for one that provides news, charts and trading, no advice. Personally I can not recommend TDWaterhouse or anything associated with them or starting with TD, but apart from that any one of the online brokers will do the job.

Next you need to pick some stocks, which is where it gets tricky. As a beginner you need to keep it simple and not risk too much money. You need to decide if you are an investor or a trader. Investors invest for the long-term (years) - stock traders trade for the short-term (hours,days,weeks or sometimes months).
For short-term trading you need to understand something about stock charts. You need to buy when a stock hits a bottom and sell after it has moved up (usually you are looking for a gain of between 5 and 10%). With small gains like that, you can see that you need to make trades fairly frequently.

So how do you know when a stock has hit a bottom ? You need to follow the stock charts, find a stock that has been trading in a channel (i.e. bouncing around between a support level and a resistance level - see - support and resistance) and buy when it hits its support level and sell when it hits its resistance level.

This is a very simple stock trading strategy to follow, but some traders do very well out of the stock market using only this. There is a danger when trying to trade stocks that you end up overcomplicating things. But basically the stock maket is not difficult to understand, you buy some stock, wait for it to go up then sell it back to your stockbroker. For slightly less basic charts, check out candlestick charts

Another basic element to understand is that you can't get it right all the time. You will inevitably make losses, but you need to make sure that your gains are more frequent (or more significant) than your losses.

If a stock drops more than 5% after you have bought it, then sell it and move on. You can do this automatically by setting what is known as a stop-loss . That way if the stock drops then it is automatically sold out of your account. You have lost the battle but not the war.

The video below gives a good explanation of what support and resistance levels are and how to spot them - if you are impatient you can fast forward through the first 45 seconds

Further reading : Investing in stocks for beginners
Home : Investing in Stocks for Beginners