| Anyone can quickly learn how to use a stock market | | | | to supplement other stock market trading systems |
| graph to determine how a particular financial market | | | | that are based on market information, or |
| is behaving. But when it comes to making regular, | | | | fundamental analysis, then your chances of success in |
| profitable trades it's quite evident that graphs alone | | | | any given trade increase dramatically. The easiest |
| are not enough. | | | | example of this is in the commodities market. If you |
| You can certainly temper your financial trading | | | | know that production of aluminium, for example, has |
| decisions by using a graph system - that's what this | | | | recently been cut back, and you also learn that a |
| article is about - but if you use it in isolation then | | | | number of government-backed projects requiring |
| you'll be missing out on its full potential. Let me | | | | large amounts of aluminium have been or are about |
| explain. | | | | to be announced, then it is fairly safe to say that the |
| We all know that higher highs and higher lows mean | | | | price of aluminium will be going up sharply in the near |
| a rising market. The trend is upwards. But how do | | | | future as production facilities have to be re-opened |
| we know from the chart whether the trend is about | | | | and further investments made. |
| to end? We can calculate the resistance level, but | | | | Going long in aluminium or the stock of a major |
| these can be and often are broken. And what if it | | | | producer in these circumstances is almost certainly |
| has already been breached and the chart shows no | | | | going to result in good profits. But in order to |
| sign of the upward movement ending? | | | | maximise those profits it is prudent to consult your |
| Are you going to invest your money on the basis | | | | graphs, or charts. It may be that aluminium is still near |
| that the bull market will continue? Or stand by and | | | | a 50 day high and hasn't yet reacted fully to the |
| risk missing out on easy profits? Perhaps you're a | | | | news of the cut-backs in production. This is how a |
| swing trader and decide to go short. At this point | | | | stock market graph system can be used to cover |
| you're probably going to turn to fundamentals (unless | | | | yourself against defective trades, or alternatively give |
| you are a die-hard technical analyst) for further | | | | you more confidence that your position will prove to |
| guidance. | | | | have been correct. |
| So there's a problem with using charts and graphs | | | | In summary, information is king, but in the financial |
| alone, even allowing for all the indicators that go with | | | | markets it pays to test it against what your charts |
| them. And that is that what ought to happen seldom | | | | are telling you to ensure that not only have you |
| actually happens, or at best happens but at a | | | | taken the correct position but that also your timing is |
| different time from that indicated by your graph. | | | | not too soon or too late. |
| However, if you use your charts and graphs strictly | | | | |