Reading charts is an difficult task that can take years to master. Why do we read charts? Because by reading charts we can determine what the stock is doing.
That is really the whole point.
And this is what separates the beginner trader from the pro's There are five factors on a chart that make it worthy of trading. By checking these factors we can determine with certainty which direction a stock will go.
There five questions that you want to ask yourself when you look at a stock chart. Here they are...
- What stage is this stock in?
- Is this stock in and uptrend or a downtrend?
- Is the stock at the beginning, middle, or end of the trend?
- How strong is the trend?
- Where are the trend lines?
- I know it seems like a lot of information to try and keep track of but all of the above questions are essential to chart reading mastery! Now, copy and print out that list of questions and keep it handy next to your computer. Make several copies so that you can check off and make notes as you analyze your next chart.
Got it memorized? Now you won't forget anything when it's time to watch a chart for your trade. look for some of the most basic things on a chart. I've done it.
now go through the list one by one to make sure that you know how to answer the questions correctly. with practice you will not even need to think about these things, it will become second nature