| One of the things that new investors are often | | | | An early look into chart patterns and how they can |
| unprepared to participate in is chart analysis, and this | | | | be analyzed will allow you to see that there are |
| usually just because they've never been exposed to | | | | literally hundreds of different patterns and gaps, and |
| chart patterns and interpretation before. If you're | | | | trends that you can look for in the market. Although |
| interested in being successful in the market, it's | | | | this might seem overwhelming, it's important that you |
| important that you learn to use any available to | | | | at least develop a working knowledge of some of |
| make wise decisions about when to pick up more | | | | the more common patterns and develop the ability |
| shares of a certain stock, and when to sell so that | | | | to infer their meaning any time you can spot them in |
| they can make a profit or minimize loss. Over time, | | | | the charts. |
| patterns of price points form in the market, and if | | | | One of the most common chart patterns is called the |
| you learn about technical analysis, you'll know that | | | | head and shoulders. This pattern is considered to be |
| these patterns to help them make predictions about | | | | a reversal pattern because it is generally observed |
| what will happen in the future of a certain stock. | | | | while the market is enjoying an uptrend, but is used |
| There was a time in the history of the stock market | | | | to alert traders to an eventual downtrend. Once you |
| that people were required to track, record, and list | | | | see this pattern on the charts, you'll know that its |
| stock prices and trading ranges on paper by hand, | | | | name came from the small spikes in price that occur |
| but thanks to the internet and the development of | | | | on either side of a big spike, forming the outline of a |
| electronic tracking software, these chart patterns | | | | head and shoulders. Another simple type of chart to |
| can now be aggregated automatically, and archived | | | | be familiar with is the candlestick. Although this chart |
| for analysis at any time. It's important to choose a | | | | is simply, the candlestick-shaped figures it contains |
| charting tool early in your stock market learning | | | | are packed full of information that can be drawn |
| process, so that you can develop a better | | | | from their size, color, and the appearance of wicks |
| understanding of how to use it to its full potential as | | | | on their edges. |
| you become a stronger investor. | | | | |