You should know that I don’t think much of all the indicators that you can get – I prefer the simpler basic charts and using my eyes to identify opportunities. So you don’t need to spend a lot on software, you may even be able to use your online broker’s built-in charts.
One thing I do advocate is that you look at using log scales, and not linear scales for your chart. I find that they show the fluctuations more clearly, which get over-whelmed by the big moves on a linear chart.
On the basic chart, I put four moving averages to give me buy and sell indicators. I use SMA20, SMA40, SMA60 and EMA200 for the main trends. If you add candlesticks, then you can look for set ups that play into what the moving averages are indicating.
What you have to realize, though, is that these indicators are just that, indicators, and not rules. The market will do what it wants, whether or not you have a hundred indicators saying it should go the other way – you see, the market doesn’t care that you’re watching it. It’s no good you saying it can’t go that way, it just did! So live with that, and learn from it. The market is bigger than you, and it’s bigger than me, and it’s bigger than just about anybody, so nobody has control. You have to learn the psychology of saying “oh well” and being able to get on with next trade without any lasting effect from any loss period. Above all, remember that it is not an indictment of you, or of your judgement, and you haven’t failed in any personal way!
When I talk about the personality of charts, I am trying to describe the individuality of each stock and the way it moves. You should be very aware of which stock you are watching, and how it usually behaves, as each one is different. You will find the stocks in a particular sector quite often have similar characteristics, so that gives you a starting point, and the indicators I give you work more often than not; but you may find tweaking the time periods works better on some charts, so experimentation can give you an edge.
If you’ve got to this point, you know very well about charts, patterns and indicators. But if you are looking at individual company charts, what more should you be looking for?
You will notice if you look at several charts in the same sector that they have certain commonalities. You should also notice the differences. It’s no secret that some stocks are more orderly than others, and these are the ones that are easiest to trade. If you have a company’s stock that exhibits no orderliness, how are you going to trade with any confidence? You have a free choice of where to look for your trading profits, and you might as well go with the easiest targets.
By the way, if you want to check on a company’s fundamentals but don’t want to take a lot of time, because you want to spend the time on technical analysis, you could check the company’s health quickly by looking at the Investor’s Business Daily Ratings. You can get a free trial subscription to access the stock ratings.
Other web sites that can give you information on stocks include www.tradingview.com, www.bigcharts.com. www.bigcharts.com, www.Dailystocks.com, and www.stockcharts.com, which also includes a chart school if you want more information on other indicators.