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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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3. Understanding Each Part Of A Chart

Charts of stocks and indices are no more mysterious than charts of the weather or your family tree. Indeed, financial market charts may even be easier to understand since there is only one concept being charted – the performance of an investment over time.

If an experienced chart reader only had a single chart showing price vs. time, he or she would be quite able to determine many conditions of the stock or index including its trend, if that trend were changing and even if it would be a good idea or a bad idea to own it.

The process is not unlike a medical doctor observing a patient, noting symptoms and then diagnosing his or her condition. For most ailments, that would be sufficient. For more complex ...

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