Candlestick charts are a useful tool that stock brokers, analysts, day traders, and other people interested in making money from investments can use to realize greater returns. Candlestick charts are used in the cutting edge technical analysis of stocks.
Noted stock market investor made fundamental analysis famous, and for most of the history of the American stock market, this was the favored way to analyze investments. Fundamental analysis researches the company that supports the stock. It examines physical indicators like book value, earnings per share and market capitalization of companies. This is a more conservative method and is usually used by investors who tolerate less risk. In order to understand this type of research, one must understand a lot about business and how different industries operate.
Technical analysis is a more cutting edge, innovative way to look at the market. This type of research is only concerned with the stock's movement and patterns. It is not particularly concerned with the business beneath the stock. From the technical analyst's point of view, the reasons for the patterns are not important. Only the patterns matter.
Candlestick charting is one type of chart used in technical analysis. This type of charting was first used in ancient times on the island of Japan. Rice brokers developed these charts in order to time the market and find the best times to sell, and the best times to buy their commodity. Today, in the modern-day exchanges, just like in feudal Japan using rice, these patterns are utilized to track stock prices' movements during a certain frame of time.
Opening and closing prices form the bases of the candle sticks. High prices and low prices are also included, and the figure is drawn for a certain time period. There are many kinds of candle sticks. A hollow figure is drawn if a stock sells for more at closing than it did at opening. This figure is usually drawn in the color white. In this case, the stock's price went up.
A stock that loses value will be drawn as a filled candle stick. This figure is usually drawn in black.
The "real body" is the middle section of the pattern, whether it is filled or hollow. The "high", is the top of the upper shadow, and the "low" is the bottom of the lower shadow.
This type of analysis can be very easy to understand at a basic level, and it is something that can be implemented into an investment strategy early. But this is a very deep subject and it can become extremely technical as one learns more and more about the strategy and analysis involved. Beside the basic hollow and filled patterns, there are other, more detailed figures such as "doji", "marbuzo", and "upside gap two crows". Once this level of analysis is reached, it is recommended that a real investment of time is made into learning about the subject matter.
The core underlying theory of this type of research and analysis is that if a stock shows a pattern that can be recognized, it should be a simple exercise to predict that investment's movements in the future because its past is known. A fairly correct estimation of tomorrow's value can be reached based on the value today and over the previous several days. A tool like this can be helpful in achieving gains in the stock market.
Noted stock market investor made fundamental analysis famous, and for most of the history of the American stock market, this was the favored way to analyze investments. Fundamental analysis researches the company that supports the stock. It examines physical indicators like book value, earnings per share and market capitalization of companies. This is a more conservative method and is usually used by investors who tolerate less risk. In order to understand this type of research, one must understand a lot about business and how different industries operate.
Technical analysis is a more cutting edge, innovative way to look at the market. This type of research is only concerned with the stock's movement and patterns. It is not particularly concerned with the business beneath the stock. From the technical analyst's point of view, the reasons for the patterns are not important. Only the patterns matter.
Candlestick charting is one type of chart used in technical analysis. This type of charting was first used in ancient times on the island of Japan. Rice brokers developed these charts in order to time the market and find the best times to sell, and the best times to buy their commodity. Today, in the modern-day exchanges, just like in feudal Japan using rice, these patterns are utilized to track stock prices' movements during a certain frame of time.
Opening and closing prices form the bases of the candle sticks. High prices and low prices are also included, and the figure is drawn for a certain time period. There are many kinds of candle sticks. A hollow figure is drawn if a stock sells for more at closing than it did at opening. This figure is usually drawn in the color white. In this case, the stock's price went up.
A stock that loses value will be drawn as a filled candle stick. This figure is usually drawn in black.
The "real body" is the middle section of the pattern, whether it is filled or hollow. The "high", is the top of the upper shadow, and the "low" is the bottom of the lower shadow.
This type of analysis can be very easy to understand at a basic level, and it is something that can be implemented into an investment strategy early. But this is a very deep subject and it can become extremely technical as one learns more and more about the strategy and analysis involved. Beside the basic hollow and filled patterns, there are other, more detailed figures such as "doji", "marbuzo", and "upside gap two crows". Once this level of analysis is reached, it is recommended that a real investment of time is made into learning about the subject matter.
The core underlying theory of this type of research and analysis is that if a stock shows a pattern that can be recognized, it should be a simple exercise to predict that investment's movements in the future because its past is known. A fairly correct estimation of tomorrow's value can be reached based on the value today and over the previous several days. A tool like this can be helpful in achieving gains in the stock market.
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