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Investors, analysts, and stockbrokers use stock charts to graphically display stocks, bonds, or mutual funds price movements over a specific period of time. Any security with price data over a length of time can be used to create a chart. This graphic is essentially a historical record of the stocks changes in price, and is used as a tool to forecast future price movements. Traders can choose a number of options for displaying security data, daily, intraday, weekly, monthly, quarterly, or annually. The more compressed the data, the less “noise” investors sift through to create accurate forecasts. Traders generally focus on daily and intraday data in order to forecast short-term price movement. As a rule, the shorter the time frame, the more detail is available for analysis. These daily charts can be challenging, however, because they reflect short-term volatility. Large, sudden price movements, price gaps, and broad high –low ranges may skew the overall picture. Weekly and monthly charts allow investors to predict and forecast long-term price movements. A longer-term chart, (tracking between 1-4 years) presents data in the most conservative way, disregarding wild price swings. Some investors chose to focus only on the closing price data. This allows them to ignore the volatility the stock may experience throughout the day. The most popular stock chart is the Bar Chart. Analysts are required to record the high, low, and close for each period in order to graph the stock’s movement. The high and low are shown as the top and bottom of a vertical bar and the close is a short horizontal line crossing the vertical bar. Bar charts can be used for daily, weekly, quarterly, and annual stock charts. Analysts and brokers like bar charts because they are an efficient use of data and space. Candlestick charts have become popular in recent years. Candlestick charts require data on the opening, high, low, and closing prices. Analysts and investors believe that candlestick charts are easy to read, and the relationship between the open and the close is particularly clear. White or clear candlesticks form when the close is higher than the open, and black, or solid candlesticks appear when the close is lower than the open. There are a number of stock charts available to investors, and one is not necessarily better than the other. The data will be the same, but each stock chart provides a unique interpretation of that data. The important part of the equation is the analysis of the data. When analyze stock charts, an investor or broker needs to learn the basics of chart analysis and stick to one type of chart for the best results. Analysts should stay focused on the data and learn to eliminate the “noise” that is not part of the long term pictures. Finally, Investors and analysts must update and refer to the charts regularly to keep on top of the stocks movement. Stock charts are an important tool for investors trying to track a stock’s growth and forecast its future growth and earnings. Are you looking for more information regarding stock charts? Visit http://www.smart-investing-in-stocks.com/invite.html today for more information!
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