HOW READ STOCK MARKET GRAPHS?

Read stock market graphs

Here we will you how to read stock market graphs and understanding charts on the Stock Exchange. If you have a graph, more than helping you, you are bundled, then this is your article.

In five minutes you will understand forever how this works. You will see that it is very easy.

In the following image (click to enlarge), top left, we can see that in this example, we have the graphic of Apple, the famous company of the iPod and computers.

In addition, marked with a red circle (top in the center), we see that it is a daily chart. This is what is called a chart of Japanese candles, so each candle represents a day. There are charts in which the candles represent weeks or minutes, but this is daily.

The market every day, opens in the morning, oscillates throughout the day, down to a minimum, rising to a maximum and closes in the afternoon.

So, the highest point of each candle is the maximum price that Apple reached that day, the lowest point is the minimum price of the day and the body of the candle (in red or green, although they could be other colors). the space between the opening and closing of the market. If it is green, the price has risen between when the market opened and closed. If it is red, it is that the price went down:

Is everything clear at the moment? If you have any questions ask.

In many occasions, the price charts are added lines and more graphics to quickly see the market situation. It seems complicated but it is extremely simple.

The first thing you usually do is add a moving average (in blue) to determine at a glance which is the trend. We see, for example, that in recent days the trend is bearish. Although looking only at the last candles we do not have it very clear, the moving average reveals it easily:

The next thing that is usually done is to mark an envelope channel (blank), which is moving Apple’s price lately. If we are going to buy or sell this is very useful, because it warns you of the margin that is likely from which the price does not come out in the coming days.

In many occasions, the price chart is accompanied by a volume chart (practically always in the form of bars), which reveals the interest people have in Apple, as it counts the amount of sales that have been made during the day:

From here, the graph can be added some “extras”, which are the technical indicators. There are hundreds, but we are going to show two of the most common, which are tremendously useful.

This one that we see in the next image, that of the green or red bars, is called MACD and reveals the strength that the bulls or the bears bring. When the bars are green it means that the bulls are stronger and that the price tends to rise, especially when the bars are getting longer. When they are losing strength, and the green bars are shortened, MACD warns us that the price will go down.

If the bars are red, the bears are stronger and the price goes down, especially if the bars are getting longer and longer. When they start to shorten it means that the bulls are regaining control and that the price is going to go up.

This other indicator is Williams% R. It is an oscillator and there are many similar to this. These indicators are fantastic to find the best time to buy and sell. They warn when people have been buying or selling and it is time to do the opposite. They help you buy cheap and sell expensive:

There are many more indicators and graphics can be added many accessories, but what we have seen is the most important.

Reasonably, with what you have learned in this article, you will be prepared to understand almost any price chart you find out there and, in addition, you can  analyze if it is a good time to buy or sell. Faster and simpler you can not.