Investing charting
originally posted: 11/22/2006 reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email asktony@tonynovak.com.
Q: What is "charting" and how is it used to manage stock investments?
A: Charting is a form of technical analysis commonly used to track stock performance and predict short term trends into the future. This practice involves recording the high, low and ending price over a period of time, creating a record of the effects of supply and demand. The data is then used to develop a trend line to help separate the daily up and down market movements. Of course, charting has nothing to do with a company’s future performance, except to the extent that investors have build their future expectations into their supply and demand decisions. For this reason, long term investors tend to ignore technical analysis like charting and focus instead on fundamental analysis like growth trends, earnings and cash flow.
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