How to Read a Stock Stick Chart
Technical trading of stick stock charts provides analysis by means of the range of a daily stock price. Range includes the open, high, low and close of a stock. Study how a stock trends to reveal important trading opportunities.
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Instructions
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Trade stocks with the important information available from stock stick charts. The vertical line shows the range of prices. The small vertical extension coming from the left of the range bar shows the opening price or first trade price of the day. Use the Yahoo finance chart section by entering a quote to see stick and other chart types.
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Use the small vertical extension that extends from the right of the range bar for the closing price. Both vertical bars show at a glance how the opening and closing price varied from the high and low of the day.
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Notice the bottom of the range. That represents the low price of the day. The top of the range is the high price. The stick does not indicate volume. Total volume can be combined with closing price to show if the day was an accumulation day---more stock on balance was bought than sold on an up price day---or a distribution day---more stock was sold than bought on a down price day---an important warning sign of possible stock declines ahead.
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Study the opening and closing prices. Highs and lows should generally be higher than the day before. Closing price should not be at the high but only in the upper half of the daily range. This is a bullish trend. Declining prices will show a more erratic pattern of lower lows and lower highs, but the low price of the day will be near the close.
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Sell a stock if the open, close, high and low are very close and the next day opening price is equal to or below the previous close. It means that there is general agreement between all buyers and sellers on a stock, and thus, the stock will either go sideways or down. Buy a stock when stock prices are in agreement after a low.
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Tips & Warnings
Learn to read candlestick charts for other price patterns that can be found from price information.
Do not trade simply on chart patterns alone. Look for volume to complement what the charts are saying.
Resources
- Photo Credit www.sxc.com/sateda
