| Two basic historical methods: | | | | turned to stock chart analysis. There still exist |
| For many years there were two basic methods that | | | | possibilities for certain holders of financial information |
| investors and traders used to study and buy or sell | | | | to try and manipulate stock prices. However, stock |
| stocks. The first method readily available was the | | | | chart analysis does seem to offer a good alternative |
| "ticker tape". In the early 1900s, ticker machines | | | | investment strategy despite these lingering potential |
| could convey the price of the stock as the daily | | | | problems of stock price manipulation. |
| trading proceeded minute-by-minute and | | | | Studying stock charts can be combined with other |
| second-by-second. This provided trading in almost | | | | strategies using other technical indicators such as |
| "real time". | | | | stochastics. Thus, technical analysis is another aspect |
| The second method that investors used was, and still | | | | of using charts and often can be quite complex. |
| is, studying the financial activity of particular | | | | Nevertheless, one way to avoid having to rely upon |
| companies and industries. This method is commonly | | | | financial reports is to study stock charts. But, of |
| known as "fundamental" analysis. As important | | | | course, some investors and traders use both |
| accounting standards came into play, investors could | | | | methods: fundamental and stock chart analysis. |
| plot and analyze financial trends in sales, earnings, | | | | Another Case for Studying Stock Charts: |
| price-to-earnings ratios, balance sheet activity such as | | | | There is another reason for analyzing stock charts |
| cash in bank, debt and capital activity. | | | | other than relying on fundamental activity. Many |
| The Internet, Stock Charts and "Cooking the Books": | | | | investors are not "in to" crunching numbers. Many |
| More recently, and now certainly with the advent of | | | | people learn better visually. Learning to read stock |
| the Internet, stock investors and traders are able to | | | | charts offers these investors and traders a method |
| capture a visual picture of the price of a stock over | | | | to not only do historical analysis but also to try a |
| time. Trend analysis and studying stock price channels | | | | discern patterns and project trends into the future. |
| became more popular and powerful upon which to | | | | Stock Charts as a Timing Tool: |
| make wise investment decisions. It's been said that | | | | Whether you are more inclined to crunch the |
| "the price doesn't lie." This truism became more fully | | | | numbers or study a stock chart you want to keep |
| appreciated after investors became aware that | | | | this in mind. Fundamental analysis will often reveal |
| manipulation and outright lying when it comes to | | | | "which" potential stock or stocks to invest in; and |
| financial reporting were not just potential problems. | | | | stock chart analysis will often show you "when" to |
| They were realities. | | | | invest in these stocks. |
| "Cooking the books", the common term for financial | | | | Timing your investment purchase or sale is extremely |
| misrepresentation, has brutally affected many | | | | important. It is possible to invest in a good stock but |
| investors in recent years. Many have lost their entire | | | | at the wrong time. Stock chart analysis will often |
| retirement savings. Others simply have lost their | | | | reveal when to get in and when to get out. Or this |
| confidence concerning where to place their "nest | | | | said in another way, you have to know when to hold |
| egg." | | | | 'em and when to fold 'em to protect and grow your |
| As a consequence, many investors and traders have | | | | investment portfolio. |