Software for Charting
There is no shortage of charting software online, both free and by subscription. Charting software was developed to assist investors and traders who used to chart manually--a tedious and time-consuming task. But the software did not invent any new charting methods which had been developed over the years. There is a difference between knowing how to read charts and how to use charting software.
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Free Charts
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All major financial portals---Yahoo! Finance, Google Finance, MSN Money---provide free charts; so does just about every financial website. Online trading platforms come with charting software. There are also specialized charting software websites like Stockcharts.com with both free and subscription components.
Types of Charts
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Charts can be line, OHLC (Open, High, Low, Close), candlestick and P&F (Point and Figure); intraday, daily, weekly and monthly. Just about any financial instrument from stocks to weather futures can be charted.
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Chart Reading
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There are different ways to read charts and multiple software tools to help you analyze them, like MACD (Moving Average Convergence-Divergence) or trend lines. Some software automatically displays your input parameters on the chart; others allow you to draw your own lines.
Selecting Charting Software
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Learn to read charts first. Once you know what to look for, you can select the charting software that will help you accomplish the task. There is no direct correlation between how sophisticated a charting program is and its profitability. If anything, most charting software packages have too many bells and whistles. A trader with a good system will probably use only 10 to 20 percent of what a program offers.
Chart Limitations
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Don't expect the software to pick winning stocks for you. It's just a tool. There are subscription services that will promise you riches because they have discovered a fool-proof method or a magic bullet. Don't fall for it. There are no shortcuts. Successful investors must know how to do research and due diligence, analyze fundamentals, interpret news, manage trading capital and control emotions, in addition to reading charts.
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References
- Photo Credit chart image by DXfoto.com from Fotolia.com
