On another subject, it appears that -- puzzling though it may be -- a number of the elite do not know what a chart is or what it represents or what it's for. Therefore, a primer. I hope it is of some use to somebody.
A chart is a visual representation of transactions. The results of these transactions are depicted by either a line which will look like a map of the Pacific Coast Highway, or by a bar which represents the opening price (the little notch on the left side of the bar), the low for the day (the bottom of the bar), the high for the day (the top of the bar) and the closing price (the little notch on the right of the bar). At the bottom of the graph you'll usually also find volume bars which will tell you how many transactions were completed that day.
But beyond all this, a chart is a visual representation of buying and selling behavior on the part of investors/traders, not just a tally, and this behavior creates patterns (not bunnies in clouds patterns but easily identifiable, repeating patterns of behavior). Thus if you approach this from the viewpoint of psychology and sociology rather than cut-and-dried mathematical models, you'll have a leg up. These patterns do not exist in nature. They are created by the buying and selling dynamic.
Begin by thinking of the market as a giant bazaar. Lots of buyers and sellers, all excitedly negotiating prices. If a lot of people are crowded around a particular merchant's stall, he can demand premiums for his goods. If another merchant is getting little or no traffic, he must lower his prices in order to unload his goods. If he's able to manufacture a demand, he can then raise them again. Either that or use whatever demand he creates to unload whatever crap he's selling and move on to something else.
Consider also that all stocks/contracts/etc go through up/down cycles. These cycles can last for anywhere from a few minutes to several years. Which cycles you focus on will depend on the kind of investor/trader you are and what your time horizon is.
Here's how it works. Somebody's attention is caught by a particular company or its stock or a futures contract or whatever. They like it, think the price is reasonable, and begin buying it. But they do it gradually and in small lots so they don't attract attention to what they're doing. If they attracted attention, others would start buying the stuff as well and the price would be driven up because of the increased demand.
At some point, they'll "test" the market by offering some of their stuff to see what the demand is. If the demand is there, they'll offer more as the price rises. If the demand increases and the price rises further (because of buyers willing to pay ever-increasing premiums), they may hold back their stuff and let other holders provide the supply for the time being, then sell more of their shares, or all of them, when the price represents their target profit level. Selling into this increased demand is quiet. The holder of the stuff doesn't want to dump a huge amount of supply onto the market for fear that there may not be enough demand to absorb it, and the last thing he wants to do at this point is drive down the price. When the stuff has topped out and the real selling takes place, he's already out. Thereafter, unless demand increases, the stuff falls until it represents "value", to somebody, for some reason. Then the whole process starts all over again.
Does all of this require a chart? No. A chart is a tool, like a T&S display. But if used properly, it can convey information in its own way which the trader/investor may prefer over any other. To claim that the chart displays no useful information is simple ignorance.
A chart is a visual representation of transactions. The results of these transactions are depicted by either a line which will look like a map of the Pacific Coast Highway, or by a bar which represents the opening price (the little notch on the left side of the bar), the low for the day (the bottom of the bar), the high for the day (the top of the bar) and the closing price (the little notch on the right of the bar). At the bottom of the graph you'll usually also find volume bars which will tell you how many transactions were completed that day.
But beyond all this, a chart is a visual representation of buying and selling behavior on the part of investors/traders, not just a tally, and this behavior creates patterns (not bunnies in clouds patterns but easily identifiable, repeating patterns of behavior). Thus if you approach this from the viewpoint of psychology and sociology rather than cut-and-dried mathematical models, you'll have a leg up. These patterns do not exist in nature. They are created by the buying and selling dynamic.
Begin by thinking of the market as a giant bazaar. Lots of buyers and sellers, all excitedly negotiating prices. If a lot of people are crowded around a particular merchant's stall, he can demand premiums for his goods. If another merchant is getting little or no traffic, he must lower his prices in order to unload his goods. If he's able to manufacture a demand, he can then raise them again. Either that or use whatever demand he creates to unload whatever crap he's selling and move on to something else.
Consider also that all stocks/contracts/etc go through up/down cycles. These cycles can last for anywhere from a few minutes to several years. Which cycles you focus on will depend on the kind of investor/trader you are and what your time horizon is.
Here's how it works. Somebody's attention is caught by a particular company or its stock or a futures contract or whatever. They like it, think the price is reasonable, and begin buying it. But they do it gradually and in small lots so they don't attract attention to what they're doing. If they attracted attention, others would start buying the stuff as well and the price would be driven up because of the increased demand.
At some point, they'll "test" the market by offering some of their stuff to see what the demand is. If the demand is there, they'll offer more as the price rises. If the demand increases and the price rises further (because of buyers willing to pay ever-increasing premiums), they may hold back their stuff and let other holders provide the supply for the time being, then sell more of their shares, or all of them, when the price represents their target profit level. Selling into this increased demand is quiet. The holder of the stuff doesn't want to dump a huge amount of supply onto the market for fear that there may not be enough demand to absorb it, and the last thing he wants to do at this point is drive down the price. When the stuff has topped out and the real selling takes place, he's already out. Thereafter, unless demand increases, the stuff falls until it represents "value", to somebody, for some reason. Then the whole process starts all over again.
Does all of this require a chart? No. A chart is a tool, like a T&S display. But if used properly, it can convey information in its own way which the trader/investor may prefer over any other. To claim that the chart displays no useful information is simple ignorance.