Your style of trading,charting risk preferences, and the choice of indicators you use to measure performance of securities play a vital role in deciding whether to buy the particular stock or not. There are many trading platforms that provide you with the option of using the additional tools or the ability to split your screen into several charts for complete detail and analysis.
Using charting platforms for trading can immensely help you with decision-making. So, what are stock charts? How do they work? Let’s find out!
Is Charting Important For Stocks?
Charting is one of the most valuable tools in the stock market for understanding and predicting markets accurately. And thus, to navigate the stock market at its best, you need to understand how to read a stock chart.
But, how does charting help you? It basically records the stock history and illustrates the present situation to serve as a roadmap to you by highlighting the current trends of the stock.
Using charts seems to be the most relevant significance for the starting the trading. If you are a beginner and want to explore more in the Indian Stock Market, this could be the best opportunity for you. Learning charts can help you in trade.
How to Use a Charting Platform for Trading?
Stock charts present a visual representation of the historic stock price which helps you identify future trajectories based on current economic scenarios and market situations.
Different online trading platforms provide you access to both free and paid charts to analyse and make decisions. The X-axis of the chart lets you know about the trades that went off, and the Y-axis shows the prices of the stock to you.
There are three main charts that one should know, i.e., line chart, candle and stick chart, and bar chart. Candle and Stick Charts are an all-time favorite for investors. Moreover, there are a ton of indicators to the charts, including the volume, moving averages, stochastics, etc., to name just a few.
Spending time in learning and understanding about the charts can improve your financial awareness and help you to achieve better. So, let’s talk about how to use stock charts for trading –
- Chart Colors
It is fun to use different colors; many platforms offer hundreds of color choices. Why? Choosing colors gives you a clear and easy view. You spend a lot of time analysing all of those, so that you can save some of your time with different chart color patterns.
- Indicators and Overlays
To be more precise about the market data, be sure that all of the data is useful and persistent. Why? Your charts might show the cluttered results, hence using indicators and overlays help you to be persistent about the data. A price chart includes the overlays-indicators that are drawn directly for the price bars.
Using bold and crisp fonts will allow you to read the numbers and words clearly. Font size should be determined by the number of charts being monitored into one monitor. It is important for you to experiment with different fonts and sizes.
- Saving Charts
Once you are done with the charts setup, you should save it for the future. This will save your time in future, as setting up the charts and workspaces is time consuming.
If you are quite serious about trading and want to be a serious investor, you should invest time in learning how the chart works. As learning how to use stock charts can give you an additional edge on the technical side along with helping you make more informed trading decisions.