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Reading Stock Charts- Is It An Easy Task? - Mike Swanson (02/17/10)

Submitted by Mike Swanson on Wed, 2010-02-17 09:11.

Stock charts are now available for free o the internet. If you want to be successful as a stock investor, it is required that you must know how to read a stock chart. This can be very intimidating at first but with time and effort, you can do it. Once you figure out how stock charts determine overhead resistance you'll know when to sell and take profits on your trades.

The first thing you need to figure out when you look at a stock chart is the trend of the stock. The stock may be going up, trading down or moving sideways. You can determine the trend of the stock be drawing simple straight line from one point to the other.

You can use the 20- and 50-day moving average to determine the trend direction. When the 20-day MA is moving above the 50-day Ma, the symbol is trending up. The reverse means that stock is trending down. Using two MA as an indicator is an effective method that will eliminate the whipsaws and timely catch a big trend.

When you look at the chart, you should be able to discover the support and resistance level of the stock. A support level is a level a stock find enough support that it cease to decrease further and move up. A resistance level is a level a stock can not move higher and has to go down.

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.

Learning how 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.

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Hello. My name is Mike Swanson. I’m the best-selling author of the book Strategic Stock Trading. In a former life I used to run a hedge fund from 2003 to 2006 that generated a return of over 78% during that time frame. In fact it was ranked in the top 35 out of 5,000 hedge funds in 2005.

After I retired from the hedge fund world I setup this website and blog. If you sign up for my free weekly email list below I’ll send you an update on average about once a week on my views of the current stock market trends and share with you actionable investment ideas.

Now I cannot promise you that every stock I find will go up in value. I can’t promise you endless 100% returns as others claim they do and as all the disclaimers say past performance does not necessarily predict future performance and you can lose all of your money in the stock market.

This is reality.

What I can promise you is my dedication to doing the best I can for you.

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