Investing 101: How To Read A Stock Chart For Beginners - Deepstash

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Investing 101: How To Read A Stock Chart For Beginners

Investing 101: How To Read A Stock Chart For Beginners


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Investing in individual stocks

When you're new to investing, it is best to start with index funds or mutual funds. This will keep your portfolio diversified and reduce risk.

But if you want to move on to invest in individual stocks, a good first step is reading and understanding stock charts.

The stock chart

A stock chart is a graph that shows the stock price over a specific period. Advanced stock charts will show additional data. The best website for basic stock information is Google Finance or Yahoo! Finance.

The series of letters after the c...

The Robinhood app can make trading easier by analyzing stocks using the quick-to-open charts. Then, filter the chart from one day to five years' worth of performance.

Trades cost $0 with Robinhood if you wish to invest independently.

A stock chart shows historic prices. It is useful when you can decipher what it's showing so you can make more accurate predictions.

  1. Identify the trend line
  2. Look for lines of support and resistance
  3. Know when dividends and stock spl...

Identify the trend line

It is essential to understand that stocks will take massive dives and make huge climbs. But it is best not to react to these huge drops or gains.

News will come and go, but pay attention to it when news coincides with a drastic change in the trend line.

Look for lines of support and resistance

Lines of support and resistance are levels at which the stock stays within over a certain period.

  • A level of support is a price that a stock is unlikely to drop below.
  • A level of resistance is one that it's unlikely to climb ab...

Know when dividends and stock splits occur

You can see at the bottom of the chart when a company issued a dividend and if there was a stock split.

  • A dividend is when the company decides to give a portion of its earnings back to its shareholders. (Not all do. Some prefer to focus on growth). If ...

Understand historic trading volumes

At the bottom of the chart are small, vertical lines. This is a trend of the volumes at which the stock is traded.

You should not only focus on volumes when you buy a stock. While there's not always a correlation, sometimes volumes can increase to shift the stock's price qu...

When you are practised at reading a stock chart, you might be looking for more powerful tools, such as:

  • E*trade takes advantage of robust stock charts and trading tools. However, their pricing isn't the best.
  • Robinhood. This app gives just enou...

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