Free Stock Trading Course

What is a chart?

Chart analysis, also known as technical analysis or stock chart analysis, allows us to intuitively understand stocks through patterns rather than numbers. It enables us to understand stocks and their history, understand their personalities and judge their future. It shows the company's past and recent share price performance. Volume and price metrics are important for stock charts, as are the ability to view historical price patterns and trends to predict future price movements.

The chart is a tool used by investors and traders to decide whether to buy or sell stocks, bonds, or commodities. In the stock chart, you can see a lot of data, and the candle chart summarizes all transactions in any time period, such as a day or a week or a month or a year, etc. When all these summaries are drawn together, trends and patterns appear —— all of which reveal the light where the stock is now and how it got there. After all, it doesn't help much to know a stock trades at 50, but knowing it was 45 last month and 40 the previous month gives us good idea it's been in a bullish trend.

To read stock charts, you need to use stock chart software, select the chart type, configure the time range, use trend lines to determine price directions, and use metrics to estimate future prices. This may sound hard, but we're willing to help you learn. Help you read and understand stock charts, patterns, and metrics.

1.Open the stock chart

If you don't have a stock program, open the stock chart quickly and free without registration, try TradingView.

2.Search for stocks, select the chart type, and the chart cycle

After opening the stock chart program, find the search options, and enter the stock code, such as Tras (TSLA), to enter Tesla's stock chart.

First we need to set the type of chart, and usually we suggest a Japanese candle chart, either solid or hollow. Due to provide traders with more accurate trend data, it is easier to understand and observe than other chart types, and is widely favored by investors.

The second step, you need to set the cycle of the chart. It depends on whether you tend to trade short-term or long-term or in-day, and if you are short-term, you can look at the overall chart in day and week. If you're a day trader, you only need to look at a chart in minutes or hours and one day to measure your trading behavior on the day. If you're a long-term investor, you need to set the chart cycle to a week, January, or half a year to watch stock trends.

When you set the type and cycle of the chart, we will learn to look at the candle chart, understand the composition and meaning of the candle chart, and what the form of the candle combination means. By analyzing these patterns, traders can determine the stock entry and exit points. And support and resistance levels for stocks because they can provide useful information about the strength of trends.

What is a candle chart?

Candle chart is the price representation on the chart. It shows the opening, highest, lowest, and closing prices of a price in a certain time frame.

This image will make it even clearer

Bullish and bearish are time-specific market sentiment. The bulls tend to push the market higher, and the bears go it down.

Bullish or bearish depends on the candle's close. Bullish (green candle) close above the opening price, bearish (red candle) close below the opening price.

Now you already know about the candle chart. Let's take a brief look at the candle chart shape. On the last day of this course, we will focus on analyzing the early warning and influence of the candle combination form on the market.

There are many forms of candle chart, such as a single candle chart, such as hammer line, hanging line, inverted hammer line, cross line, there are also many candle chart, such as morning star line, dusk star line, three black crow line and so on. These are all terms for candle charts. As far as I know, there are at least 200 candle chart shapes. And the more candle forms you can remember if you like, but the logic behind them is the same, and if you know that, then there is no need to remember their names.

I mean to look at the candle chart and see where it closes, whether it is near the high or low point (length). It is bullish if it closes near the highs, and bearish if it closes near the lows.

The picture below has four candlesticks. Apply what you have just read, and you will find that you can capture emotions without remembering the pattern.

As you can see, bullish sentiment occurs whenever prices close near the high. And bearish sentiment when prices close near their lows. The stock regular meeting is great, right? This is,

Once the hammer line is formed, the price begins to rise. You can select any chart, and then view the closing price of the candle chart.

Well, this is a single candle chart, but what about the many candle chart patterns? Let me give you a show,

Five min of data was included for each candle in the 5 min time range. Thus, naturally, in the 15-min time range, each candle will contain the 15-min data obtained from 3 candles in the 5-min time range.

Therefore, a form that looks like a morning star in 5 minutes looks like a hammer form in 15 minutes.(See the image above for a clear view).

The candle chart combination form will be highlighted in the following course, so now back to the next topic —— index system MACD

MACD is the first metric you learn from entering the stock market and because it is used by a wide range of investors, MACD is one of the most powerful technical tools for many traders. This indicator is used to examine the strength and direction of the trend and to define the reversal points.

How to open the MACD indicator in the chart?

The MACD is included in the MetaTrader default metrics suite, so you just need to find the "metrics" in the toolbar of the chart, and then you will see the MACD

This indicator can be applied to any time range, so you can set the period of time for the MACD in the indicator system, with classic settings include 12 and 26 EMA and a signal line (SMA) with period 9. You can choose other parameters based on your own trading style and goals. For example, the MACD (5,35,5) is more sensitive and may be more suitable for weekly trading unit investors.

How to use the MACD metrics

When you apply the metrics to the chart, you see two lines running side by side and oscillating above and below the zero level.

Line 1: The MACD line (usually blue) is more than just a moving average line. In fact, it is the calculation between two different exponential moving averages.

Line 2: EMA line with MACD integrated data as the unit of calculation and more guidance. This line is called the signal line (red line). When the MACD passes through it, it triggers the buy and sell decision. The MACD is considered the faster line because the points plotted move more than the signal lines seen as slower lines.

When these lines are above the zero level, they are in bearish mode.

This indicator is considered to produce a potential buy (above the signal line) or sell indication when the MACD line intersects (below the signal line).

How to use the MACD, to trade

The most basic form of MACD trading strategy is to use the intersection point of the signal line as the entry point or exit point of the transaction. Although this approach can be profitable in many cases, the MACD signals often fail. For example, this occurs when the MACD lines and the signal lines cross multiple times. If you come in every time they cross, you will quickly lose a lot of trades in a row. That is why so many traders prefer to combine the MACD with other metrics.

But traders can use MACD signals to identify potential buys and sellers in the market. The MACD generates signals through the intersection between the MACD line and the signal line and the divergence between the MACD line and the asset price being analyzed. Here are some ways to identify buy and sell signals using the MACD:

Bullish signal: A bullish signal appears when the MACD line crosses the signal line. This could indicate that asset prices could rise in the short term and that traders may consider buying the asset.

Bearish signal: When the MACD line crosses the signal line below the signal line. This could indicate that asset prices could fall in the short term and that traders may consider selling the asset.

Deviation signal: When the MACD line deviates from the asset price, a divergence signal appears. When the MACD line is hitting higher lows and asset prices are hitting lower lows, there is a bullish divergence, suggesting a possible price reversal. When the MACD line is hitting lower highs and asset prices are hitting higher highs, there is a bearish divergence, suggesting a possible trend reversal.

In the following examples, we can see how useful it is to draw the support and resistance regions when considering the effectiveness of the MACD indicator. Obviously, when prices hit the strong support area, we can be more confident that the MACD's signal is reliable. If you look at the final rally, you'll see the MACD give us a buy signal, but when it approaches the resistance zone, it turns to the downside. If you don't draw and open a buy trade in the resistance zone, you will have a strong swallowed red candle.

This concludes the How to Interpret Stock Charts lesson. Please use the menu below to navigate to the lesson of your choice.