Technical Analysis: Charting

Sunday, 19th April 2009 17:48 - by GedW

Have you ever really looked at a stock chart? Technical analysis uses stock chart patterns to make money in the market. Technical charts can be hard to decipher for the uninitiated. With trend lines, candlesticks, and trading channels, understanding charts requires a solid knowledge in understanding the anatomy of a stock chart. Are you ready to get ‘Chart smart’? What is Charting? Charting is the process of looking at a stock chart to glean information about where a particular share is going (moving) in the future. Just like someone who follows fundamental analysis will use a company’s income statement, balance sheet, and a slew of other financial data to figure out what a company’s prospects are, a stock chart can give a technical trader some hints too. The distinction between technical investors and fundamental investors is an important one. Those who look at charts are predominantly thinking short-term (Traders), whereas fundamental analysis usually takes longer to bear fruit (Investors). Technicals usually yield smaller individual gains than a longer-term investor might get from a well-picked fundamental stock, but the frequency of trades is where Traders really make their money. Even fundamental hedge and mutual funds typically employ Traders who are responsible for looking at technicals to follow a portfolio manager’s strategy at the best possible price. That is largely because experienced Traders make money on 90% of their trades.