Question:
When looking at stock charts what time period should I be looking at?
nearcal1
2008-09-11 13:34:54 UTC
I have been learning to read stock charts but I don't know what time period I should be looking at. The technical indicators change depending on the time period. Should I look at 1 day, 5 day, 3 month, 1 year, etc. I'm trying to find entrance and exit points but don't know which chart to use. Thanks.
Five answers:
anonymous
2008-09-11 14:06:55 UTC
1. Check one year daily charts first for long term trend lines which you need to be aware of before buying/selling. Don't skip this step as it often identifies trends that you won't see in shorter time frames. Use a solid candlestick format.



2. Check the 3 month daily chart as reflective of the quarter, which will reveal subtrends that aren't always evident on an annual chart.



2b. Next interpret the last couple candelsticks on the right to "read" what the market is going to do for next market day. Example: Monday to Tuesday trend will give a read on what is happening Wednesday.



2c. Compare the above to the 3 month weekly chart to "read" what is projected for the week. Again, Week 1 and Week 2 candlesticks will indicate what Week 3 is likely to do. All of these together will give you a great read on when to enter and exit.



3. Check the 5 day one 1 minute chart, or whatever is the smallest increment you have available. It makes you aware of current volatily range and short term trends. Finally, check the 2 day 1 minute chart for the same thing, especially in a volatile market like we have now.



Draw trend lines for all of the above, from the lowest point on the left of the chart to the lowest right of it for an uptrend line, and from the highest point on the left of the chart, to the highest right for the downtrend line.



Together you'll come up with a good read. Test your projections each day against what you see. You'll find you'll be pretty good at it after you do this each day. There are a lot of other elements to help you tighten up your projections that you can read, and best learn from actual experience.



Recognizing turning points is critical. If you're not already conversive on the topic (you may be already) get a simple book on candlestick charting to learn how candle shapes, proximity to trend lines, and volume enable you to build a strong projection. Most of the time candles are right, and trend lines only confirm them stronger. Learning how to average candles together for further confirmation, what shapes indicate indecision or push/pull situations, and likely reversals or surges, is very important. And by all means get a subscription to Investor's Business Daily - great stock screens for you to select from, and excellent investor training on pattern recognition and when to enter/exit a position. Read William O'Neill's books. He says more in less words than anyone and is very, very good.



All the best to you!
anonymous
2008-09-11 17:53:57 UTC
The fundamentals reported on Enron would have kept you in the stock until they went bankrupt.



The chart of Enron would have shown you the drastic change in trend, given you several exit points, compared against the upward trend previous. Nobody would hold through a 50% reversal in price, shown on the charts. Only the charts give you a clear line in the sand to exit.



To answer your question though, there is no one particular time frame that works best, they must all be considered. It depends on your trading style. Find setups on the daily time frame, and find entry points on a lower time frame. When the lower time frame support and resistance agree withthe daily and weekly charts, they are better respected.
Tutot Kent
2008-09-11 14:30:07 UTC
I think most of investor are using the monthly and yearly period, because investing in company stocks is categorized in "long term investment" and financial statement report for the stocks usually done in the end of month, to find out about the stock performance, trace it for at least in a past 2 years performance history, this is different with investing in foreign exchange, where the profit can count in only minutes, but also with very high risk
The Old Guy
2008-09-11 16:17:55 UTC
I believe "Robe" has given a very appropriate response and should be followed.



Here are some sites that may help you

http://stockcharts.com/

http://www.stockta.com/



Good luck, whether you're an investor or trader, you should always look at the technicals. And never buy against the trend.
anonymous
2008-09-11 13:45:01 UTC
Charts tell you nothing at all about where a stock is going "in the future", charting is pretty much meaningless; if you can find a chart of Enron's stock price, you might understand what I mean!



You should buy stocks based on their fundamentals, not based on any "pattern" their price makes on a graph!


This content was originally posted on Y! Answers, a Q&A website that shut down in 2021.
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