How to Create Stock Graphs
Skilled stock traders use simple technical analysis tools to help them determine how to build graphs that reveal stock trends. This, in turn, allows them to make profitable trades. Most aspiring traders, however, don't know how to create stock graphs that are effective in revealing solid trade setups. This leads to frustrating losses. Fortunately, there are a few simple steps to create stock graphs that reveal actionable trades.
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Instructions
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Setting Up Shop
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1
Go to a computer and log on to a free charting service like FreeStockCharts.com. Click the "New Chart" tab at the top of the screen to create a new stock graph, which will appear on your screen. Input a stock symbol that you want to analyze; the symbol will appear on the screen of the graph.
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2
Select the "OHLC," which stands for the "Open High Low Close" feature of the price bars. The vertical height represents the price range for that price bar. The horizontal line on the left-hand side of the price bar represents the opening price for that price bar and the horizontal line on the right-hand side of the price bar represents the closing price for that price bar.
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3
Click the "Indicator" tab on the upper part of the screen and select "Moving Averages" or MA. Moving averages are the average price close on a stock's price action over a given period of time. Select the 10-day MA, the 40-day MA, and the 200-day MA. These three MA's represent the short-term, the intermediate-term and the long-term price trends in a stock's price action. They will reveal the trend in each of these respective time frames at any given point.
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4
Select the "Trading Volume" indicator by pressing the "Indicator" tab again. The indicator will appear on the lower part of the stock graph below the stock's price action. The "Trading Volume" indicator will reveal buying and selling volume for each price bar, revealing to you whether the price action is under accumulation or distribution. Accumulation means that there is buying going on. This should make the market rise, whereas distribution indicates selling, which could cause the market to decline.
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Tips & Warnings
If market trends indicate rising trading volume, with all three moving averages stacked in proper order while trending upward, then you have a bullish stock prospect that you should consider entering. If the opposite occurs, you should consider short-selling the stock.
Stock graphs help give you a picture of what is going on with a stock's price action, but you should round out your trading by having a defined set of rules to determine when you will enter and exit a trade. Be disciplined in following these rules because they will keep you out of mediocre trades while protecting you from risk if the trades go against you.
