Candlestick Trading Blog
September 12, 2008
Stock Trading Education
| When learning to invest in the stock market a stock trading education is vital to your success. New investors must determine if they are looking to practice long term investing or if they would like to practice short-term stock trading. This is determined by each investor's investment philosophy. Meaning, they must decide if they believe in the methods used in fundamental analysis or technical analysis. Fundamental analysis is the analysis of various characteristics of a company in order to determine its value. Fundamental analysts typically practice long term trading as opposed to short term trading. Their stock trading education consists of learning how to study everything that affects the value of a security including the economy, industry conditions, and the financial condition of companies of interest. Technical analysis, on the other hand, is the studying of chart patterns as it relates to price movements in the market. They don't look at companies individually, but instead trade stock based on identifying chart patterns that help them to predict price movements. For those investors interested in trading stock via the use of technical analysis tools, their stock trading education most likely consists of learning either day trading or swing trading. Day trading is the buying and selling of stock in very short time periods. Typically this time period is less than one day and often as short as a few minutes. Swing trading relies on intraday charts to plot stock movements, but swing traders typically hold stock for one to five days. In order to practice these types of trading, investors must learn how to read stock charts. Stockcharts are actually price charts that display securities so that traders can forecast future price movements. Many short term traders opt to use Japanese candlestick charts. Part of their stock trading education is to learn how to analyze candlestick chart formations in order to predict these future price movements. Japanese candlesticks have been around since the 17th century. The development of this analysis evolved from the use of years of trading rice! Many of the same methods are still used and many investors prefer the use of candlestick charts as opposed to bar charts and line charts, because candlestick charts are more visually appealing than other types of charts. When analyzing stock chart patterns using candlesticks, traders will see that the data displayed consists of the open, high, low and close values for each time period. There is a hollow or a filled portion of the candlestick that is called the real body and there are long thin lines above and below the body that are referred to as shadows. The shadows depict the high and low with the top of the upper shadow, depicting the high, and the bottom of the lower shadow depicting the low. For those investors interested in learning more about Japanese candlestick stock trading, you will find that this method if the method of choice for many stock investors. Continue your stock trading education and learn how to make money short term trading though the use of technical analysis. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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