What causes the cost of a stock to go up, down, or sideways? Most of what occurs in the market is psychological. The cost of a stock is set by the passion or conviction of all potential customers and sellers. There has to be a consumer for each seller, and a seller for every purchaser. It must balance out.

The cost of a stock will go up when purchasers are way more excited. This implies the clamor for a stock, the orders to buy, is larger than the supply, which is the orders to sell. When the opposite is correct the cost of a stock will go down. If consumers and sellers have about equal conviction, the cost of a stock will stay just about the same. Understanding this idea is an excellent start in market technical research.

Chart reading, often referred to as technical research, provides us with a record of the battle between consumers and sellers. We are ready to visualise who is winning this battle by researching price and volume action. This is done on a short or long term basis. Some researchers also use over-bought and oversold signals as an element of their across-the-board research. I don’t use these signals, because markets can actually go down or up, much longer than, and much further than, what the majority believe is attainable.

Chart reading helps us establish the strength of demand vs the pressure of supply at diverse price levels. This gives us a smart idea of the likely direction a stock will move. When you know the probable price direction of a stock, you have risen your percentages of success significantly. Lucrative trading is all about chances and putting the chances in your favour.

In the market, history does repeat itself pretty often. This is due to human instinct, which never changes. Man’s instinct with its feelings such as gluttony, fear, and hope, is what gives us re-occurring chart patterns. Learning to correctly research these patterns, with price and volume research, is the secret to success.

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