You seem to think chart analysis is a lot more difficult than it really is. Instead of giving it a go on your own, you rely on the wisdom of us brilliant chartists to hand you money-making set-ups on your favorite stocks.
I am here to tell you, friend, that it’s not that difficult to do some basic technical analysis on your own. Let’s take a walk through the basics, shall we?
Connect the Pointy Bits
On a stock chart, you have peaks and troughs. In order to identify the trend of a stock, you simply find these peaks and troughs and connect them with a line. In order to make the chart fit your thesis, it is acceptable to plot the trend slightly below, or above the actual lows or highs. Whatever looks prettiest works best.
Color Within The Lines
Though you may take some liberty with the actual placement of the trend line, don’t go overboard. Stay on one side of the candlesticks. I realize it’s difficult to grasp at first because there are just so many pointy bits, but you will get it with some practice. I promise.
Adjust Accordingly
If you have publicly posited a thesis involving a current trend, and that trend is soon broken, you may feel slightly embarassed. This is a rookie mistake. The pros know you can simply change the trend to fit the chart as it develops. Then you simply say that the trend has shifted. Place all blame on the stock or the market in general. The truth is, we’re all pretty much making this shit up as we go along.
Learn the Simple Chart Patterns
With a clever combination of a stock chart and your trend lines, you can even draw some really cool shapes. Above, you will see everything from simple geometric shapes, to male genitalia. These patterns are presumably to help us chartists trade better, but really we just think they look super awesome.
There you have it; Charting 101. It’s really not as hard as it looks. I have done the illustrations in the style of a 4 year old, because a 4 year old can do this. Go ahead, and give it a try. If you want a more serious walk through on how to read stock charts, check out that post.
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{ 12 comments… read them below or add one }
funny, practical, cheers
Thanks, Bob.
LOL – that’s the first time I’ve heard an inverted H&S pattern called that!!
Nice post for noobies!
–joe
SnoopyJC´s last blog ..snoopyjc: RT @ppearlman ill be doing Shrinkology on http://StockTwits.tv/ at 930EDT $$
It’s just so much easier to say than “inverted head and shoulders.” Just ask Adam Sandler.
lol…..awesome…..totally true!!! Great…now 18000 traders have lost their job security!
The great thing is, no matter how simply you state something, some people just won’t get it. Therein lies the trader’s job security.
Laughed out loud. I’ve spent a few years learning this stuff in my own time, and you make it sooo simple!!!
tradersam´s last blog ..today – open sgx – thoughts on cpb
I subscribe to the K.I.S.S. camp. It’s the only way to go.
oy…
Best reaction yet.
i like it can u explain whats the preedicted change with the double and head and shoulders ect.
For the double tops/bottoms the expected change is the distance from peak to trough.
For the head & shoulders the expected change is the distance from the shoulder line to the peak.