I decided to do a refresher class on things I had learned sometime back so let me share the information.
There are three charts used by investors to analyse the market:
a) Line charts
b) Bar charts
c) Candle stick charts
Line Charts
These are basic and most common charts. However, line chart information is limited as it gives the investor one price value i.e. the closing price. It leaves out three other important prices i.e. the opening price, the high price and the low price.
Bar charts
Similar to the line chart. The difference is that it displays 4 price values i.e. the opening price, the high price, the low price and the closing price making it a very useful took for trading.
Candlestick charts
These are complicated but the best.- These were developed by rice trader Homma in the 1800s. They have been refined and improved. The candle sticks charts are still used by traders today. Why use candlesticks? Because they tell us valuable information about investor sentiments and decision making e.g. fear= sell, greed= buy.
Candle sticks reveal a unique type of information that no other indicator does i.e. human emotions
Benefits of using candle sticks
1. Knowledge of candle sticks combined with technical analysis give traders the ability to identify the current market trend
2. Candle sticks helps traders recognize a change in market direction. A series of green ascending candles can be easily be identified as an uptrend
3. Ability to place trades with greater confidence and clarity of mind
4. The visual illustration allows candle stick traders to recognize trades that are not working
The size and the color of the body and the length of the shadows are very important information regarding the current market direction, possible market reversals and the strength of future price movements.
So the homework for you is to practice on candle sticks using a virtual account and keep records of the trade moves you make.
Tuonane lesson 2 kesho.
There are three charts used by investors to analyse the market:
a) Line charts
b) Bar charts
c) Candle stick charts
Line Charts
These are basic and most common charts. However, line chart information is limited as it gives the investor one price value i.e. the closing price. It leaves out three other important prices i.e. the opening price, the high price and the low price.
Bar charts
Similar to the line chart. The difference is that it displays 4 price values i.e. the opening price, the high price, the low price and the closing price making it a very useful took for trading.
Candlestick charts
These are complicated but the best.- These were developed by rice trader Homma in the 1800s. They have been refined and improved. The candle sticks charts are still used by traders today. Why use candlesticks? Because they tell us valuable information about investor sentiments and decision making e.g. fear= sell, greed= buy.
Candle sticks reveal a unique type of information that no other indicator does i.e. human emotions
Benefits of using candle sticks
1. Knowledge of candle sticks combined with technical analysis give traders the ability to identify the current market trend
2. Candle sticks helps traders recognize a change in market direction. A series of green ascending candles can be easily be identified as an uptrend
3. Ability to place trades with greater confidence and clarity of mind
4. The visual illustration allows candle stick traders to recognize trades that are not working
The size and the color of the body and the length of the shadows are very important information regarding the current market direction, possible market reversals and the strength of future price movements.
So the homework for you is to practice on candle sticks using a virtual account and keep records of the trade moves you make.
Tuonane lesson 2 kesho.
