Stock market charts help traders and investors visualize price trends in stocks, indexes, ETFs and other financial assets. You do not need any particular charting skills to get a market overview and to recognize the bullish or bearish drift in stock prices or major support and resistance price levels. For the buy-and-hold investor this visual information may be enough to make a decision.
Swing traders are almost by nature technical traders. Past price action, chart patterns and the interplay between price changes and technical indicators are used to develop expectations about the possibility of future price action. There is almost no limit to the variations in what information stock market charts can display but they all share a few common characteristics.
Technical Analysis Assumptions
Technical analysis “works” under the following assumptions: (1) Price discounts everything. All the information that could affect the chart price has already been perceived and evaluated by the market. (2) Price movements are not random. That is not to say that price changes do not follow statistical distributions over the short term but it certainly does mean that hundreds of billions of dollars are not changing hands every day on the equivalent of a coin toss. (3) What happens on the price chart is more important than guessing Why it happened.
Here’s the Market Location page from Swing Master Chartist. We look at like a jumbo jet control panel. Is the stock gaining altitude? Flying too high for safety? Losing power? Some of the chart styles and technical indicators in the panels may be unfamiliar to you. Each contributes in its own way to discerning the current technical strength or weakness of the stock, index or ETF and whether or not you would want to be a buyer or seller.
Every stock market chart tells a story. Maybe the “trick” is to toss away all your preconceptions about what the chart should be saying, and let it speak for itself. Dr. Bill Williams, a clinical psychologist, developed a complete and comprehensive stock and futures trading method. He said that people do not trade the market. They trade their own belief system about what the market should be doing, often making up excuses for why the price chart was not acting the way they were expecting. Not only is the trading outcome often less than desirable it’s comes with a hit to confidence.
Complete Swing Trading System
Swing Master Chartist’s TO Swing Trading System deploys all of the components of the Bill WIlliams trading method along with a few other indicators that we have found to be helpful to swing traders.
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