If you are interested with stock trading, understanding the stock chart and its use is important. Stock charts are always there for a long time but they are more popular today as a trading tool because a lot of online trading stocks are now available.

Types

The tracking of stocks through stock charts are done daily or on a weekly basis. Others provide a trading history of stock overview for the past few years. The line chart is the simplest type of chart showing the stock price typically at market closing. Candlestick or bar charts are more popular since this kind of chart is able to show the range of prices from highest to lowest prices every day, week and month.

Features

Stock Charts Stock charts provide much information aside from the price graph. At the top, the date and the stock symbol is seen, along with the low, high and closing price. The traded shares volume is usually here also which is located below. This will be a moving average. This will be the average stock price for a specific period of time and it is labelled as MA(60) or MA(90), wherein the numbers represents the number of days included in an average. At the bottom, there is a bar graph showing the daily traded shares volume.

Function

The stock prices may be rising, called as upward trend, or falling, called as downward trend. Sometimes, stocks are in “consolidation”, which means that it’s not greatly changing. The stock chart’s purpose is to help investors identify early upward trends so that they will be able to purchase early and spot early changes to a downward trend and sell it.

Considerations

The key of stock charts is learning to identify patterns of behavior of stocks. This is one of the reasons why stock charts are used. To identify the changes in trend, investors look for resistance levels and price support. In a stock chart, the price support is the low price beyond wherein the price of stock doesn’t follow. If the price support level is reached, it reverses in direction and starts to trend back up. The price resistance is the reverse. It is a high price wherein the stocks stay under. Occasionally, a stock is into either price resistance or support.

Benefits

The varying availability of stock charts and charting tool online has made stock trading especially short-term less uncertain. But investors who seek long-term investments must also learn to read and use charts. If you are able to identify companies whose prospects that are long-term make a good investment, you will find that you still want to have the best price as possible as you can. Through the use of stock charts, the stock traded prices are identified if it is lower than average then do the purchasing, save money and increase the investment return.