What to look for in stock charts?

[Jordan Maddison]

Hi, what should I look for in stock charts?

[Hannah Fischer]

Hello, thanks for asking the question.

When it comes to investing in stocks most important things to look out for are: trend line, lines of support and resistance,  knowing when the dividends and stock splits occur and to understand the historical trading volumes.

Trend line is an indicator of value of the chart, in itself it contains the historical trajectory of a stock's value and it can be used as a handy tool for predicting the potential value of a stock.

Lines of support and resistance are there to instruct the buyer about the downside and upside cap value of the stock, in other words, they represent the limits beyond which stock shouldn’t rise above or fall beyond.

Dividends and stock splits, in the first case it means that company has decided to pay out a chunk of profit to its shareholders, and it also means that company has decided to sell more stock and it is looking for investors which is a good way to get into stock owning.

As for understanding historical trading volumes, it is important to understand these as these volumes dictate the rise and fall of a specific stock, so knowing these enables a person to predict the rises and falls of stock’s value.