Even Though a market closes and opens and may have weekends, the balance of supply and demand in any market or security is always like an ongoing story. That is why most of the top successful traders have one common skill of reading chart bar by bar.
“Charts are never silent, It always tell something and sometimes shout. Only those can hear who have developed skills”
Why Reading Chart Bar By Bar So Important?
An average trader or investor depends on numbers of concepts for their decision like fundamentals, news, recommendation, tips, technical indicators, trading systems or some self-developed misconceptions and the list is really very large. While a skilled chart reader only requires basic chart which has no more than only price and volume data.
An average trader is never confident about his trading even after using all this data mentioned above. Since he doesn’t know how the market will react to the particular fundamental event or technical signal. While a skilled chart reader concentrates on what the market is telling him. He only trades in the direction in which the market want to go. He is like a neutral umpire in the game of bulls and bears.
A skilled chart reader is always confident about his win in trade because he will always be synchronized with the smart money who is controlling the direction. He is able to watch the real scene behind the ongoing price and volume activity. By his skill, he is able to sense tops and bottoms of the market in all time frame still he trades only when his risk reward is favorable.
So this is the edge of a skilled chart reader by which he can be one of the successful trader among the top traders. Even this may seem like overwhelming, but it is really very difficult to develop this skill and it requires hard work, practice and experience in trading.
Basic Elements Of Chart Reading:
Signs Of Trend Expiration
Identification of Climax Points In Trend By Price Volume
Sign Of Strength And Weakness With General Market
Identification Of Support And Resistance Level
False Breakouts And Real Breakouts
Interpretation Of Each Bars Using Price Spread, Range And Volume
Test Of Support And Resistance Level After Breakout
This post is just introduction of a branch of technical analysis which is to read charts bar by bar. We will discuss all of these in detail in coming posts.