How to read stock charts

Another list of tips for profitable technical analysis of charts

This is a common question: "How to read stock charts". This task could be complicated for some traders/investors. But the answer is simple: "It is not rocket science".

I would like to describe some tips I use in my daily trading for my fund.

1. Everybody can learn how to read stock charts
   

   It is not complicated. You need only use common sense and basic principles of technical analysis.
   



2. Do not complicate this task
   

   Use candlestick stock charts with few indicators only. Keep it simple. It helps !
   
   
   

3. The most important knowledge is to learn how to find support and resistance levels.
   
   Support and resistance are two most important basics of good stock chart analysis. There are several ways how to find them but it is not necessary to use all of them. Just stick to one or two.
   
   
   

4. Second important knowledge is to understand what is current trend of stock market
   
   "Trend is your friend " is big truth. Do not fight trend.  So it is important to know what is current stock market trend.
   
   


5. Learn to recognize stock chart patterns
   
   Stock chart patterns help to find good entry level, good stop loss levels and also possible target levels for planned trade.
   




6. Include stock volume analysis
   
   Trading volume is very important value I monitor on every chart. Every strong move should be accompanied by strong volume. Strong volume moves are ones with biggest profit potential.
   

And you have got all important knowledge how to read stock charts effectively.

Do you have some questions regarding reading of stock charts ? Feel free to send me your questions.

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