Author: Jenny Taylor
We covered a few basic stock market terms in a previous blog post. This time we are going to talk about a few terms that have to do with Technical Analysis. Technical Analysis is super important for trading, in fact it is the second leg to our three legged stock trading table. The other two legs of the table are Fundamental Analysis and Market Tone. All of these are discussed in detail at our live Step 1 Event. For now, let's keep it simple and just talk about the basics of technical analysis:
What is it? - Technical analysis is the use of charts that measure the price and volume movements of stocks over time, to help determine buy and sell points on stocks. The charts graphically display the supply and demand of the stock. The Price Graph or Chart can be set to many different styles including a line graph, a bar graph, or even a Candlestick graph.
Candlesticks reflect the impact of investor sentiment (supply and demand) on stock prices by showing the opening, closing, high and low prices for each day. We like to have our graphs set to Candlesticks.
Support: Stocks will often find an area on a chart that it has trouble moving down past and instead will stop at that price point and bounce up. This is what we call an area of Support.
Resistance: The same is true on the upside of a stock’s moves, as well. This area is known as resistance, where the stock has a tough time moving up past that point, rather it tends to hit it and fall back down.
When you hear the term Volume, that is referring to the number of shares of stock that was bought AND sold on that particular day.
Seeing a picture of a chart helps make sense of it all:
Simple enough. right? When tackling the confusing world of finance, take it one step at at time. Mull over these 5 terms and become familiar with them. At our live event, Step 1: Start Your Journey, you'll learn more useful stock market jargon, and we'll talk in detail about these 5 terms. This event was designed with beginners just like you in mind! Click here to find an event near you!