Introduction to Technical Chart Analysis Video Lecture | Stock Trading: A Complete Guide (English) - Business Basics

hey guys Allen here with eat sleep trade
net and I just wanted to do a little
introduction video for those of you that
are brand new to trading or just brand
new to technical analysis and charts and
aren't really sure what you're looking
at when you look at a chart so I just
kind of wanted to go over those things
with you guys and see if I can't make
you feel a little bit more comfortable
looking at a chart and help you guys
understand what you're looking at when
looking at charts so people use you know
many different methods to analyze a
security or stock before they make a
decision to invest in that share or
stock and these two different methods
can be broken down into two broad
categories and the first one is going to
be fundamental analysis and fundamental
analysis is basically researching a
company's financial characteristics to
try and find its value so you'll be
looking at you know sales revenue income
debt etc you know all those kind of
things to try and find what a company's
worth is and the second category is
technical analysis and that's what the
whole concept behind eat sleep trade is
technical analysis through charts and
you might be asking well what is
technical analysis
well technical analysis is the study of
a Security's price movement through a
chart and we use these charts to
identify certain market conditions such
as market trends and use those to try
and determine which direction
the price is headed whether that be up
or down we're trying to predict you know
which way the price is going to go based
off analyzing these charts and a chart
is basically a representation of a
securities price over a set time frame
so an example of a chart here I'll pull
up is this one here
and this is fidelity's active trader Pro
this was given to me through fidelity
which is the broker I use for trading
and if you guys have brokers already set
up more than likely you can talk to them
and most of them have some type of
trading platform that allows you to look
at charts now if you don't have a
brokerage account or you're new to
trading and you're just trying to kind
of get a feel for technical analysis to
see if that's even something that you're
interested in there are free websites
that you can use to look at charts and
one of those websites is stockcharts.com
they come right up here to the top at
free charts and you could type in a
security hit go and it will create a
chart for you and you can read and
analyze that chart for that specific
security and then the another website is
free stockcharts.com and that looks like
this here you just click start it'll
load up for you and it'll give you a
chart and you can look at different
securities and start analyzing them and
looking for you know those those
patterns that indicate a price movement
in the direction that you want it to go
so those are two options that are free
if you guys don't have a broker account
and you're trying to look at charts
there's
two places you can do that now look now
that you can see a chart and you know
that technical analysis has to do with
looking at these charts and finding
specific conditions that show buying
opportunity so you're looking at this
and going well what does all the rest of
this stuff mean so this chart is broken
down into what we call candles or some
people use bars either ways here we're
looking at a candlestick and while the
chart represents a time frame each of
these candlesticks also represent a
specific time frame so right here on
this chart that we're looking at now
each one of these candlesticks
represents an entire day's worth of
trading now you can change these to
anything you want you could do a
10-minute candlestick so now what that
means is this is the price movement
within a 10-minute time frame so I'm
going to break down a little bit farther
on what candlesticks are and how to read
them alright so as you can see here we
have two candlesticks we have a green
candlestick and we have a red
candlestick okay and first I'm going to
go over is this point right up here
so let's draw a line out and this point
here is going to represent the highest
price of the candle okay oops
so that's gonna represent the highest
price of this candle so for example if
this were a 15-minute candle then the
highest price that the stock rose within
this 15-minute period would be this
price right up here okay and we'll go
ahead and we'll call this price two
dollars now the second
area that we're gonna be looking at is
the very bottom of this candle right
here okay and this is going to be
represented as the lowest price of the
candle okay so now we have the lowest
price of the candle and we have the
highest price of the candle and we're go
ahead and call this $0.50 okay so now in
this 15-minute duration our price has
gone as high as two dollars and it and
as low as 50 cents okay and these two
lines here are known as the shadow of
the candle okay so a price at which the
candle visited you know at the highest
point and the lowest point so it's it's
a shadow and the solid center here is
called the body of the candle okay so
this is the shadows of the body and now
on a green candle that we're looking at
here this is going to represent a
positive price movement okay that's why
it's green for positive meaning that the
price went up in this 15-minute range so
it was higher at the end of that 15
minutes then what it started at so this
first area right here on a green candle
the bottom of the body is going to be
your open price okay so that means that
whatever this price is that is or
wherever so let's say sorry about that
let's say that this is $1.00 right here
that's what our candle opened up at so
let's say that the opening price was $1
and since this is a green candle that is
going to represent positive movement
okay so that means that the price is
moving up
okay and we have here up at the top the
other end of our body and this is going
to represent and this is going to
represent the clothes price okay so now
looking at a green candle
we know that the low of our price our
lowest price of that 15 minutes is $0.50
the price of which the candle started
that 15 minutes at is $1 and the price
at which the the candle ended its 15
minutes ask we'll call it 175 okay so
the price at which the candle closed and
then the highest priced that the candle
went to in that 15 minute duration was
$2 so now we have a basic idea of what
each of these candles represent now
let's look at our red candle so first we
have these top areas which are going to
represent the same thing so the top of
this candle is going to represent the
highest price of this candle and the
bottom shadow is going to represent the
lowest price of the candle now on a red
candle we are representing a negative
movement or a move down okay so what
that means is that our candle price
opened here on this top side so the
opposite of our green candle this would
be the open price okay and then our
candles closing price which is down here
on this side which would be our closed
price
so now you guys can see that these red
and green candles represent a specific
price over a specific duration of time
whether that be five minutes ten minutes
or one day or one week worth of price
action okay so now you guys can see what
a candlestick is and what a bunch of
candlesticks together are and they make
what we call a chart and we use these
charts to identify certain market
conditions and determine which direction
a stock or security is going to continue
or which way it's going to go whether
that's up or down all right guys so
that's gonna wrap it up for this video I
hope you have a better understanding of
what technical analysis is and what
we're doing here at 8:00 sleep trade
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alright guys thanks for watching and
we'll see you in the next video