Stock Chart Analysis And Understanding Trend Lines

by Jagger Stone - Date: 2010-08-24 - Word Count: 497 Share This!

Nearly all practiced equity market participants understand trends in the stock market offer the very best possibilities to profit. Technical analysis in the basic form is largely utilized to identify trends in price action which is what all stock investors search for. Market conditions and outside influences all play a defining factor on which way the stock market is presently trending. Learning to distinguish these trends in the equity markets is one of the keys to success of a stock trader. Moreover, identification of the trend must be acquired before the stock trader can employ them in his trading plan.

The conventional definition of a upward trend is the movement of higher highs and higher lows than previously illustrated on the chart. The trend is seen as unbroken until such point a preceding low point is breached and serves as notification to the trader the existing upward trend may be in jeopardy of coming to an end. Downward trends are characterized very much the same way as upward trends but in the reverse, lower lows and lower highs. Again, the downward trend is deemed unbroken until such point a previous high point is broken. But, a alteration of trend is not absolutely going to happen when a prior high or low is attained. After a previous high or low is reached, the stock trader should be alert the possibility is there for a possible alteration of course.

Technical analysis is the instrument in which stock investors use to translate and spot the trend inside the equity markets. The stock trader need to have an awareness of how these analysis correspond with the development of entrance and exit of orders in the stock market Essential study and research is necessary for the trader to employ trends as a instrument for proper order entry centered on stock market analysis. Probable future direction is what expert stock traders plan to conclude through the detection of the present trend and why stock market analysis is such a powerful application. After hours analysis of single stocks and their established trend through stock market analysis is where the trader should spend closing market hours. Estimates of market direction and likely locations of order execution can best be decided in after hours analysis of individual trading charts.

History of the course the market followed to arrive at the existing trend is critical to reveal direction of coming ranges. Earlier history of many stocks can also help the trader establish where the market is likely to go once the current trend has been exhausted. Possible direction alteration as a result of trend change can divulge possible spots of profit by employing against the past trend order execution.. Recognizing the trend is the first phase in financial market analysis and is the route to profitability as a trader. Potential future movement and the elements resulting in this movement can only be established if the trader has the discipline to put aside the time for study of the stock market.

Related Tags: stock market trends, stock trends, stock trend trading, trading trends, trends in the stock market

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