I know many people buy stock and sell stock according to the recommendation from “experts” on Radio, newspaper and TV show. While there are many people buy and sell stock according to the market emotion and their own emotion. However if you know how to read stock charts, you can decide by yourself when to buy and sell stock.
Why Use Stock Chart
Stock charts are thermometer of stock market. Stock charts can tell you whether the stock market is healthy or not, the status of supply and demand. Stock charts can also tell you whether it is a bull market (uptrend market) or a bear market (downtrend market).
Type of Stock Chart
There are many types of stock charts, for example, line charts, candlestick charts, bar chart, etc.. Each chart has its advantages and disadvantages. However we found that the bar chart is the best stock chart for market diagnosis. Throughout the whole article, we will only use bar chart to analyze the trend of stock market.
Below is a blank bar chart for your reference.
- The upper portion record the price on a daily basic.
- The lower portion record the daily sale volume of shares
The chart may either be an individual stock (e.g. Hong Kong Bank) or a stock market index (e.g. Hong Kong Hang Seng Index).