Learning how to trade the stock market successfully can come with a lot of challenges.
Something that can help you create an edge over the market is reading and accurately analyzing stock charts
In this thread, we go through everything you need to know about stock charts
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What Exactly is a Stock Chart?
A stock chart shows you a visual representation of what price has done in history and what it could do in the future
For example, a 15 minute chart shows what the price is doing every 15 minutes,
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Choosing the Best Stock Chart 1. Line Chart
This is the simplest of all the stock market charts. This chart also has the least amount of information and is just one long line moving higher and lower.
It doesnt show the high or low price and reduces noise 4/n
2. Bar Charts
The bar chart and candlestick chart are similar.
The bar chart shows you more information than a line chart as it also shows you the open, close, high, and low that price made for each session.
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3. Japanese Candlestick Charts
Whilst the candlestick chart shows you the same information as the bar chart, it also includes a body. You can normally change the color of the candle body to suit your own needs.
Green : Bullish , Red: Bearish 6/n
How to Read Stock Charts
Some of the most popular strategies for reading stock charts include;
Look for a obvious Trend
Use Support and Resistance
Add important Indicators
Follow Volume Information
Youtube Video of the same:
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Before I proceed Ahead ,
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Look for the Obvious Trend
Obvious trends will tend to run for long periods. Whilst every trend has pullbacks where price makes a move against the trend until the trend fails, it can offer high probability trades 9/n
In the example chart below price is on a trend higher. Price makes regular moves and swings lower against the trend, but the trend overall continues moving higher.
These swings lower against the trend can often be the best spots to look for trend trading entries 10/n
Using Support and Resistance
When using support and resistance in your trading, you can either look for the support or resistance to bounce or for a breakout
Support and resistance are some of the most common forms of trading across all different markets and time frames.
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In the example below, price moves into an important area of support. This could be a high probability area to look for long trades before the price rejects the support level and then moves back higher. 12/n
Adding Important Indicators
One of the most popular indicators in the stock market is the moving average and, in particular, the longer-term 200 ema
The 200 ema can give you a quick indication of the overall price trend, and it can also be used as dynamic support and resistance.
In the example chart below, we can see that price continually stays below the 200 period moving average.
We can also see that each time price moves higher to test this moving average, it rejects it as resistance and moves lower. 14/n
In the example chart below, we can see that price continually stays above the 200 period moving average.
We can also see that each time price moves lower to test this moving average, it rejects it as Support and moves higher.
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Following the Volume Information
When the price is moving higher with increased volume, it is normally seen as a good sign that the stock is strong and healthy. The opposite is also true when the price starts falling, and the volume is increasing.
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A thread to pick stocks moving 20-30% in a week๐งต
( Chartink link at the end of tweet )
Technical Criteria 1. Stock near 5% of 52 week high 2. Stock above 30 weekly ema : Stage 1 uptrend 3. 21ema > 50ema signifying strong uptrend
You can also add Volume criteria
I made A few Lakhs using this Famous Swing Trading Strategy
A thread
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It is characterized by a period of price volatility followed by a contraction phase, leading to a breakout in the stock's price. Here's a breakdown of the VCP pattern:
Breakout Rules :
Buy Stocks on Break , not after breakout
Use Alert Systems or place GTT orders near Breakout area
If you miss the breakout better to stay away from stock as RR goes out of favour
It took me 3 years to understand Volume Price Analysis
I'll explain in next 10 tweets
A thread๐งต
RT for max Support
Support Resistance
โ They simply represent the 'extreme' psychological levels of fear and greed in that particular price region and time.
โ Strength of Buyers = Sellers
โ Lower volatility price congestions
7 less known Tradingview Indicators that all traders should know about
A thread๐งต
1. @TraderLion_ Enhanced Volume Indicator
Lime Green Bars Suggests day when the stocks closes near the days high and volume greater than past 10 down volume days Suggesting Institutional Accumulation
Has Features Like :Highest/Lowest Volume in a year.
Modified version of Bollinger Bands
When price is written in blue, volatility overall is falling. When the outer bands start to fatten up in blue, a contraction signal is forming. Works with any length of your choosing