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If you’re thinking of taking the plunge and trading in the stock market, there are a few things you should know. There is always risk and the market can be volatile and unpredictable. However, armed with some knowledge and careful thinking, you may do well. Information is your friend when playing the market. A great source of info is a stock chart. But, you must know how to analyze them. Here are some of the basics.
Start With the Basics on a Simple Chart
If you have no previous experience, even the best stock charts will be of little use. A great place for a beginner to start is Google Finance. You can search for the ticker of a specific company and it will display a simplified chart. The chart will show the name of the company as well as its stock ticker symbol. You will also see the current price in U.S. dollars of a single share of stock. This is what it would cost to buy, or what you would get if you sold.
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The stock market is open Monday through Friday from 9:30 a.m. to 4:00 p.m. During that time, the trading transpires. Trading is the buying and selling of stocks. The prices will fluctuate as per supply and demand. Beneath the price of the stock, you will see a number and either a down or up arrow. This shows how the price has changed since the market opened. Up for an increase, down for a decrease.
The Trend Line
You will also see a graph that charts fluctuations over a given period of time. You can choose to display the changes over one day, five days, six months, or one year. Also, you can choose year-to-date which will show the changes from the beginning of the current year to today. By viewing the trend line, you can get a feel for how the it’s been faring in the market for the chosen period of time. Analysts use this to make predictions about how it will perform in the future. It’s still largely guesswork, but they are educated guesses.
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Important Basic Terms
There are some basic terms used to refer to components of a stock chart that are important to know.
- Open: The price of the stock when the market opened that morning.
- High: The highest price the stock reached during a day of trading.
- Low: The lowest price the stock dropped to.
- Close: The price of the stock when the market closed.
There are more advanced terms as well but it’s a good idea to familiarize yourself and get comfortable with these before moving on. Analyzing stocks can be complex and you want to take it a bit at a time.
Playing the stock market can be fun and rewarding. However, it also involves considerable risk. Arm yourself with current information by using stock charts. Use these basics first. Learning the ins and outs of trading lasts a lifetime.
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