There’s a reason why market analysts and Wall Street experts wear fancy suits and choose to speak in stock exchange jargon. It’s all part of an act that they purposefully convey to overcomplicate things so they can make themselves appear more qualified than they actually are.
Doing so allows them to hog the spotlight and take advantage of people, such as yourself, who don’t necessarily have the time to sift through charts and learn the terminology.
But did you know that 70% of these insiders fail to beat the market?
Only 3 out of every 10 of these so-called “experts” are able to accurately predict what direction your investments are traveling in…
I don’t know about you, but that leaves enough reason for me to take matters into my own hands.
The thing is, trading shares and pulling profits are far easier than the higher-ups make it out to be. In fact, it only takes memorizing these 3 EASY terms to get ahead of the game. Allow me to explain.
When it comes to beating the market, things can be boiled down to trends, HLC bars, and moving averages.
Simple enough, right?
Being able to identify trends is key to making the most out of your investments. Lucky for you, it’s as basic as drawing a line.
The next time you find yourself looking at a stock chart, take a moment to determine if the shares are moving up or down. You can do this by drawing a line that touches at least a few of the listed values.
If that line is angled up, chances are the stock is in an uptrend, which is a positive sign when it comes to trading. On the other hand, if that line you drew is aimed downward, then it’s a great indicator that a decline in share prices is to follow.
But if you want to dig even deeper into this chart analysis, you can add HLC bars to the equation.
These bars do nothing more than show the various price fluctuations for a single day or week, depending on the length of the chart you’re looking at. Just remember is that HLC is an abbreviation for high, low, and close, respectively, but for the sake of investing, all you really need to worry about is the C for close.
If shares have consistently closed at a higher rate than the previous values, then the rule of thumb is that the chart should be in good health!
Many chart screeners make this easy for you by putting a dash where trade prices closed for that day or week.
Finally, the moving average, or MA for short, is another tool for predicting what direction your investments are heading in.
This is simply a line that cuts out all the “noise” from the random price fluctuations that tend to take place so you can easily trace the average price of shares as they move up or down.
Typically, this is the red line you’ll see alongside the HLC bars. Just understand that if the moving average is rising up with the HLC bars, it’s generally a good sign for profits.
Well, there you have it. These 3 terms make up chart analysis in its most basic form!
Obviously there are other factors that feed into the overall process; however, trends, HLC bars and moving averages can take you a long way if used correctly.
Hopefully you can see that trading stocks is not as complex as the insiders make it out to be and if those experts fail 70% of the time, then who’s to say that you can’t do any better?
Moving forward, feel free to use these tools to your advantage or apply them to the many recommendation services that WSI TV has to offer.
