How to study stock charts ?

How to study stock charts?


How to study stock charts



The stock market works on the supply and demand concept, therefore, the most important parameter for the study of the stock is volume and price. To study the stock charts we must understand the chart formation with volume. Volume spread analysis is the term used in this blog to explain the stock chart formations.

Volume spread analysis

  1. Stock chart with open - high - low - close and volume will explain how supply and demand works and shows on the chart for the analysis.
  2. To study stock chart volume represent one half of the information, price represents the other half of the information for correct analysis.
  3. On the chart, volume work as fule for driving the price movement
  4. Stock price movement forms the charts so what is driving the stock price we need to find the answer?
  5. There are two types of value inside a stock price 1. Intrinsic value 2. Perceived value
  6. In the market, many experts suggest stock price movement should be linked with Intrinsic value but the secret is the stock price should be driven by the Perceived value of the stock.

Study chart for analyzing accumulation and distribution 

  1. Professional traders are experts in their filed.
  2. Professional traders are experts in the accumulation and distribution of stocks.
  3. Professional traders are very good at deciding which stock is good for accumulation and distribution.
  4. When they decide to accumulate the stock they will not but in a hurry, they first plan the accumulation campaign.
  5. Accumulation means buying as much stock possible without moving the stock price up or down from the buying level.
  6. This type of movement takes place after the bear move in the stock market.
  7. But the important question arises here is who is selling the stock to professional traders?
  8. Banks are not selling - directors are not selling - its the retail investors floating supply of stock professional traders are accumulating from retail investors because retail investors are in fear due to the previous bear phase-in market.
  9. When a floating stock gets accumulated by the professional trader's bullish move start in the stock.
  10. Identifying the accumulation and distribution on the chart is the real study of charts

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