How to read stock charts for beginners
Why even look at stock charts?
Some investors have never seen a stock chart, and have no idea how to read them. They just listen to their financial advisors, read the Wall Street Journal and watch CNBC. They ride their stocks on a wild roller coaster and become emotionally attached.
Others are educating themselves on understanding price flow with stock charts. These investors are managing their own capital based on market trends and price patterns. They time the market based on daily trend lines and higher time frame weekly analysis.
I have over 20 years market experience with a proven trading methodology. We use simple price patterns with market trend. We incorporate simple stock chart technical analysis to stay on the right side of the market.
How complicated is this?
How time consuming is it?
Does it work?
Early in my trading career I made a ton of mistakes, as I had to learn everything the hard way.
Things I used to do wrong…….
-Was “all in” on every trade, always swinging for the fence
-Faded big moves in the market, rather than ride trend
-Listened to opinions, rather than PRICE
-Trusted “professionals”, rather than do my own homework
-Bought stocks cheap, rather than trade the breakout patterns
Believe me, none of this works.
You have to define your risk before every trade, and only allocate a small portion of your trading capital to each trade. It is imperative that your trade the trend of the market, rather than pick a top or bottom. Opinions are 50/50 odds, while trading price pattern gives you a edge. Brokers, financial advisors, and most investment professionals work to “gather assets” and live off the fees to manage your money. They can not afford to time the market, so they keep you fully invested. Lastly, stock are cheap for a reason…….because they are going LOWER. While breakout stock are high for a reason………because they are going HIGHER. Keep things simple.
Ok, so back to the charts.
Stock charts tell you everything you need to know about investing and trading your own capital. They tell you the TREND, and reveal which stocks are showing relative strength/weakness leading the market. The charts give you calculated entries and defined risk. It is imperative to always know your exit before you enter any trade or investment. Risk management is the #1 key essential to trading success.
Here are some basics on how to read stock charts.
First, you should build a chart of a stock you are looking to trade, using a daily time frame with 12 months of data. The weekly chart will be your higher time frame (which is always in charge for bigger price movements). Next, you will add your 10 day simple moving average (sma). This moving average tells you the market trend. Finally, you will add your Moving Average Convergence Divergence indicator. The MACD is our momentum confirmation indicator. You now have your charts setup exactly how I view them every day.
Now, you can Google search SMA, MACD, Technical analysis for definitions to confuse yourself. Or, you can just keep things simple and add them to your charts and starting trading price.
As you become more experienced viewing stock charts, you can then start searching for price patterns and scanning for historical chart pattern comparisons.
Here are some of our Historical Chart Pattern Comparisons we have traded
Simple Price Patterns
-Bull flag (2/2019)
Break below the uptrend line. (10/2018)
When you become more advanced you can use head and shoulder/inverse head and shoulders, cup and handle, Fibonacci retracements/extensions, MA top/WV bottom.
Just using a daily chart built with 10sma and MACD and understanding simple price patterns you will be on your way to huge trading success.
What does Fitzstock Chart do and how are they different?
-We keep things very simple with trading Rules of Engagement (ROE) based on market trend. Our daily Focus List has all of our trade setups with calculated entries and defined risk. The service provides educational videos along with market video updates throughout the week. The weekend market analysis covers current market conditions with new trades setting up. In addition, we provide real time stock/futures and options trades on my private Twitter account (@fitzstockcharts). In 2019, we have a 90% winning percentage with over 70 stock options that have doubled.
Fitzstock Charts now has over 1,000 different stock options that have DOUBLED from our suggested entries, while some options have returned over 600%
We are educating traders around the world with our Rules of Engagement (ROE) based on market trend. If you are under performing the stock market with your trades and investments, it is never too late to upgrade.
What does Fitzstock Charts include?
-Daily email updates include our Focus List with calculated entries and defined risk
-Stock chart technical analysis searching for relative strength and weakness
-Weekly video analysis covering our Focus List and the current market conditions
-Educational videos and posts using our trading methodology (ROE)
-Access to private Twitter (@fitzstockcharts) where I post real time updates and trades
Follow me on social media:
Twitter (public): https://twitter.com/Fitzstock2004
Learn stock trading and how to day trade stocks with Fitzstock Charts. We scan for historical chart pattern comparisons with trading rules of engagements. The #1 Stock trading consultant in the business, teaching you how to get started trading. Learn how to read stock charts with our key essentials to trading success. We find the best stock charts and implement stock options trading strategies with stock chart technical analysis. If you want learn more stock chart analysis, check out my daily blog updates.
We are constantly scanning for the best stocks to buy, best stock to trade, and tell you how to trade stock options.
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I look forward to helping you meet all your investment and trading goals.
Fitzstock Charts, LLC
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