Learning How To Read The Stock Market

Learning How To Read The Stock Market – The recommendations shown on this page are from companies that receive compensation. These indemnities may affect how and where products are displayed on this site (including, for example, the order in which they are displayed). it does not cover all companies or all market offers.

If you are a new investor, we recommend that you start by reading this introductory guide and investing in an index or mutual fund. This will diversify your portfolio and reduce risk as you learn more about the stock market.

Learning How To Read The Stock Market

Learning How To Read The Stock Market

If you already have basic investment knowledge and want to improve your stocks, read on.

Learn How To Pick And Buy Stocks As A Beginner

Getting started with investing can seem daunting or, for some, scary. But you will need to know how to read and understand stock charts if you want to make informed decisions when buying individual stocks.

In this article, I’ll break down the basics of the chart and explain the key points you should know. By the end of this simple book, terms like ‘dividend’, ‘trendline’ and ‘support lines’ will not be familiar.

Simply put, a stock chart is a graph that shows the price of a stock over a period of time, such as five years. Most advanced products will display additional information and by understanding the basics you can gather more information about the stock’s history, current history and forecast.

Now let’s look at the standard table. For this reason, let’s use Apple stock as an example, as seen on Yahoo! finance

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If you don’t already know, the series of letters after the company name is the ticker symbol. It represents the company on the stock market.

I’ve also taken the liberty of filtering down to the last 15 years, which you can easily do by changing the date above the widescreen image.

So here we look at the last 15 years of Apple stock. I hope you wish you had invested in Apple in late 2008/early 2009!

Learning How To Read The Stock Market

Now let’s dive into the different sections and sections of the chart so you can start reading like por.

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A stock chart becomes more useful when you know how to read its data and interpret what it shows so that you can make accurate predictions about how the stock will perform in the future.

There are four important things you need to understand to make the most of the power of charts.

It’s the blue line you see every time you hear about stocks – it’s going up or down, right? While the lines are going to seem normal, there are a few things I want to point out to be a little clearer.

First, you should know that the stock will make big drops and it will also go up a lot. Don’t get too hung up on discounts or benefits. You only need to use this part of the state diagram to see what’s going on.

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In fact, the navigation bar should lead you to dig deeper. For example, Apple as a company really started from 2009 to 2012.

But what happened from 2012 to 2013? Stocks began to sink – at one point stocks were down over 40%!

This is where your line comes in. News comes and goes, but when news meets a dramatic change online, it’s something to watch out for.

Learning How To Read The Stock Market

If you have seen something like this happen, I encourage you to find out what is going on in the company. Many great companies can repeat their success, but not all can.

Support And Resistance Basics

First, long-time CEO Steve Jobs resigned in 2011. Then in 2012, Apple reported a sharp drop in profits despite a growing smartphone market. Finally, they tried to distribute the telephone in developing countries where it was too expensive to compete.

But new CEO Tim Cook has taken decisive action with the company to turn it around, and the bottom line shows it.

The lesson here is to look at your first line and use it as a benchmark.

Next, you will identify support lines and resistance lines. A support line is a price that cannot fall, while a resistance line is a price that cannot rise. That is, until a big change happens, like a drop in interest rates.

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Think of these lines as roadblocks. When you shoot, the ball bounces back and forth between these solid blocks.

The purpose of this is to know when to buy and when to sell. Let’s look again at the Apple stock chart for example:

This makes sense and everyone interprets it differently, but the process is important. Note that everyone will draw a line and support different lines, depending on their investment (when they plan to hold the shares).

Learning How To Read The Stock Market

So if you plan to hold it for a long time, you can’t draw too many support and resistance lines because you don’t care about the ups and downs. However, if you are a short-term investor, you can download more to analyze short-term trends.

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Knowing the resistance lines can help you decide when to buy or sell stocks. However, remember that this is only subjective and does not give you an exact road map of what to do. You will need to use your own analysis.

Below in the table you can see if the company has paid dividends and when there were dividends:

A dividend is when a company (board) commits to return a portion of its profits to shareholders. If you own shares, you get a small portion of the profits.

Some companies pay dividends, others don’t. Whether or not a company is profitable doesn’t mean it’s not worth investing in. There are many other factors to consider.

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Some companies prefer to focus on growth, so they will increase profits instead of returning them to shareholders. Other companies (such as Apple) may pay dividends without providing growth.

As shown in this figure, Apple started paying quarterly dividends to its shareholders in mid-2012.

You can also see that there have been stock splits in 2014 and 2020. Stock splits are an effective strategy by a company’s board of directors to issue more shares.

Learning How To Read The Stock Market

In 2014, Apple implemented a seven-for-one stock split (expressed as 7:1), which means that for every share of AAPL it owned before the split, it will now own seven. So if you had 100 shares of APPL before the split, you would now have 700.

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A company’s value doesn’t change, but a stock’s price can. Companies will do this more often if the price is out of line with competitors or to attract small investors (if the stock price is low).

You can also see a rising trend line after the split. When a stock split occurs, more people invest (because the stock price is often lower), which increases demand and, in many cases, the overall price of the stock.

At the bottom of the picture you can see small, vertical lines. It’s a trend in most retail stores.

Sound is good to know, but it shouldn’t be the only factor in your decision when buying stocks. Usually, business increases when there is great news (good or bad) about a company.

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When the volume increases, the stock price can change quickly. Let’s look at an example:

In line A, you can see that there is a large number of trading activities that are associated with falling stock prices. There may have been news that day that scared people (besides the entire economy that collapsed that year).

On line B, you can see a slight increase in business activity associated with an increase in stock price growth.

Learning How To Read The Stock Market

Don’t always assume that there will be a correlation between the stock price and the size of the business, but it is good to know the size of the stock in the past and what it is today before making a decision.

Basic Stock Chart Technical Analysis

With abundance comes ease when buying or selling. If a lot of people sell stocks that day, you should buy or sell sooner.

Once you are comfortable reading stock charts and feel you have the basics down, you may be looking for a more powerful investment tool. Here are some great options we recommend.

Where alternatives like E*TRADE give you bells and whistles, some people don’t need all that. The Robinhood app does a great job of giving you enough information to start making more informed decisions.

Robinhood is a popular trading and investing software that offers commission-free products on thousands of investments, including stocks.

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