Using Stock Charts

Together with the development of technology, nowadays

, we can find stock charts available for free on many financial sites. Reading these charts is really an art and a science and it is important to know how stock charts determine overhead resistance to make money trading. And if you want to succeed as an investor, you should know something about these charts. In order to become a stock chart expert, you will need great determination and dedication.

The first thing you have to know when you watch a stock chart is the direction of the movement. There are three types of directions: moving up, moving down and trading sideways. The simplest method used to determine the trend of a stock is to draw lines between two critical points on the chart.

To get rid of whipsaws and catch the trend at an early stage, you should consider using two moving averages as an indicator of thee movement of the market. One excellent example of the most commonly-used MA combinations is the 20-day and 50-day MA. When the shorter-period MA (the 20-day) moves above the longer-period MA (the 50-day), the stock is trading up. And the reverse is true for a stock trending down.

The key point you should be able to tell when you see a stock chart is the resistance and support level of the stock. A resistance level is the level at which the stock find resistance and can not move up. Thee reverse is true for a support level,

You should always buy when the symbol is trending up and sell when it is trending down. There is no alternative. What is hard about investing is that you can not determine exactly what the symbol is doing at the time you decide to jump in the market. Being right in the stock market requires lots of work and dedication.

Being able to read stock charts is critical to an investor's success. No matter what type of investor you are, fundamental or technical; you should know at least how to read stock charts in order to survive in the harsh investment world.

by: Michael Swanson

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