Stock Market Charts – An Overview
September 27, 2009 by tuwall
Filed under Market Overview
Just like any other chart, the stock market charts too display information in graphic format. Graphic format is much easier to understand compared to numerical data. Generally, stock market charts help people engaged in stock trade understand the performance of shares over a particular period. They are also used to project the future trend of the growth of a particular stock. Stock charts can be regular or 3D depending on the nature of information it provides.
Stock Market charts are yet another useful tool used by stock brokers and people interested in stock trading. These charts are used to study the movement of stocks, based on which strategic decisions can be made. People who are willing to invest in stock market need to know which company’s share to purchase. They can take a look at the stock market chart to understand the trend of different stocks and then make their decision. Similarly, stock market charts also help people who already holding stocks to decide when to sell off.
Some stock trading companies customize the charts to suit their clients’ needs. This is done to avoid information cluttering and thereby enabling the clients to focus better on the relevant stocks. The most favorite destination for stock market charts is the Internet. Several online stock trading companies have put up stock market charts on their websites. Many offer customized charts relevant to the search data input by the visitor.
Generally, the stock charts are designed in OHLC format. OLHC stands for Open, High, Low, and Close format. These charts offer information on the volume traded, the high and low values in a given period and the opening as well as closing price of the stock.
Reading stock market charts involves some level of skills. You have to ask yourself some questions: What is the status of this stock? What stage is this in? Is it at the beginning, middle or at the end of the trend? Is the stock in uptrend or downtrend? Where are the trend lines? What wave is the stock in? Is the chart smooth or sloppy? What are the visible patterns? What are the gaps in the trend? Do I need to purchase weakness or sell the strengths? And, what does the volume indicate?
Thinking in terms of the above questions while looking at the chart helps you gain proficiency in reading the charts. There is no crash course to read charts. This skill can be achieved by practice alone. But then, this skill is not very hard to acquire. Several online trading companies offer the facility of charts. You can download them and analyze them. Even novices can deduce results when they are done with quite a few charts. To increase concentration, it better start with charts that offer customized information. This type of charts are comparatively less cluttered and offer focused information which is especially helpful when you are a beginner.
Most stock trading companies offer candlestick charts. Candlestick charts emphasize on the interests of buyers and sellers. These charts are helpful in determining the winners: buyers or sellers. If the sellers are winning, it means that the stock prices will rise and if the buyers are winning, it shows loss in the price of stocks.