Stock Charting - Tracking Market Movements For Smart Investing

If you asked an experienced investor what the hardest part of their stock market journey has been

, they'll probably tell you it was making the decision to buy their first stock. Although there is endless opportunity for making your money grow when it's invested in the stock market, there are also big risks when you put your money in the hands of a company with the hopes that they'll do well so you can sell it for a profit. There are no guarantees in the stock market, so the only way to make sure you don't put your money at risk unnecessarily is to learn how to use stock charting to keep track of the fluctuations that are taking place.

In case you're unfamiliar with stock charting, it is basically the process of recording data from the daily trading sessions of the stock market so that it can be analyzed and evaluated over time. There are many different kinds of stock charts, all designed to allow you to evaluate a different period of time, or to compare different influencing factors that might be responsible for price movements of the lack thereof. There are no rules about which charts you have to be using, but it's important that you do employ some sort of tracking tool so that you can see how a certain security performs over time.

One of the most basic types of stock charting was developed by the Japanese rice traders of several centuries ago. The wanted a way to not only evaluate the way that prices were changing over time, but also wanted a way to observe how the emotionalism of the public might be influencing the prices that they depended on to make their living. To answer this need, they developed the candlestick chart, which employed candlestick-shaped figures to not only communicate the opening and closing prices for a day of trading, but also utilized "wicks" or "shadows" to communicate the entire range of prices that had been reached throughout the day.

Once you've become familiar with the practice of stock charting, and been introduced to several different kinds of stocks, it might be time to explore the practice of technical analysis, which relies heavily on the information that the stock charts can provide. Because technical analysis is based on the assumption that the market prefers to move in trends, and that history is destined to repeat itself, technical analysts believe they can predict future movements of stock price simply by tracking past fluctuations and patterns.

by: Aaron Livingston

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