Learning to Read a Stock Chart
Above is a one day stock chart called a candle chart. Each bar (candle) is 5 minutes of time. It is Anavex Life Sciences - AVXL. On March 5, 2019 at 9:30 AM (EST) the stock starts rising - it has two rises from 9:30 to 11:35 AM. Then it starts to drop and at 1:05 PM it starts rising again. It has two rises from 1:05 to 4PM. There, you just read a stock chart!. Now this is just a plain chart and if this is all you had to decide when to buy and when to sell it really wouldn't be of much use. Below is exactly the same chart with some lines on it.
These lines are called studies. In this case these lines are simply three different averages of the price of the stock as it changes during the day. I think it is very obvious how using these lines would help you to decide when to buy and when to sell. At 9:35 AM the blue line has crossed below the yellow line and the red line shows upward movement indicating what is called a buy signal. You could buy it for $2.65. Now you could sell it for $2.85 when the candles start to turn red just after 11:35 for a profit of 20 cents per share. An hour and a half later you could buy it again for $2.80 at the next buy signal (blue line crosses below the yellow line and the red line is still showing upward movement) and then you could sell it for $2.95 just before the market closes at 4 PM for a profit of 15 cents a share. Your total profit depends on how many shares you bought. Of course you must pay the broker a commission. I use Think or Swim by TD Ameritrade - the commission is $7. And by the way that is $7 to buy and $7 to sell. So you must buy enough shares to make enough profit to pay the commission and have some left over to keep for yourself. In this case if you bought 200 shares for the first trade you would have made $40 - $14 commission = $26 profit.
This is just a basic introduction to reading a stock chart and making a trade. There are several more factors to consider when trading stocks. Can you see now how with some training and coaching you could make $100/day? In this example you would have to trade from 9:30 to 11:30 AM to make $26 profit but if you could buy 600 shares that would be $78 and honestly many stocks go up more than 20 cents.
This is just a basic introduction to reading a stock chart and making a trade. There are several more factors to consider when trading stocks. Can you see now how with some training and coaching you could make $100/day? In this example you would have to trade from 9:30 to 11:30 AM to make $26 profit but if you could buy 600 shares that would be $78 and honestly many stocks go up more than 20 cents.
So how much do you need in your stock account to be able to make trades? In the example above to buy 600 shares at $2.65 you would need $1590.00 to purchase the stock and $14 for the round trip commission (buying and selling) so you would need a total of $1604.00. If the stock costs more then you would need more money to buy it. For example if it was $13.25 you would need $7964.00 to buy 600 shares. So I recommend that you open your account with $2,000 then use the paper trading to practice. Then make small trades (200 shares under $5) with real money to slowly build up your account. You are not only building your monetary account but you are also building your confidence, skill, and knowledge as you use real money to make live trades. It takes time, patience, concentration, and a good memory to use everything you learn to become a successful day trader.
