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A Beginner's Guide to Charting Financial Markets: A practical introduction to technical analysis for investors by Michael Kahn

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1. The Basics Of Chart Reading

What is a chart?

A chart is a tool both investors and traders use to help them determine whether to buy or sell a stock, a bond, commodity or a currency. In one neat package, a huge amount of data can be viewed and as they say:

A picture is worth a thousand words.

For investors, that picture can be worth a thousand days of data, or a thousand weeks of data with, if one chooses, as many indicators and formulas as one can fathom.

As mentioned, bar charts summarize all the trading for any given time period, such as a day or a week (see Chart 1.1). When all those summaries are plotted together, trends emerge and patterns form – all revealing where a stock is right now and how it got there. After all, knowing ...

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