We are delighted to announce a new section on the Bull Market forum where you can post investment charts and discuss with other members. We believe this will be an invaluable tool going forward giving an indication of share prices which are particularly strong, particularly weak or perhaps set to break out of their trading range. Even though some people are sceptical about reading charts it does certainly have a role to play in the modern day investment arena.
What do charts tell you?
Sceptics will tell you that a stock chart only tells you what has happened in the past and not what will happen in the future. In reality this description is fairly accurate although it is possible to compare and contrast emerging patterns to see how the share price might react going forward. It is only when you put together the indicators of a share price graph with underlying research that you get a greater understanding of the potential.
Many people swear by moving averages such as the 20 day, 50 day and 100 day figures. Various patterns have emerged time and time again which very often indicate momentum on the upside or the downside.
Unexplained share price movements
What you will see time and time again is unexplained share price movements, whether on the upside or the downside, just prior to important announcements. If there is good news or bad news in the offing then very often this information is leaked behind-the-scenes and can have a significant impact on the share price. Regulators have since the year dot attempted to stop the leaking of sensitive information but in reality insider trading is one of the most difficult crimes to prosecute.
If you have never really looked at share price graphs as a means of perhaps prompting you to look at a company in more detail we strongly recommend you do so in the future. As we have mentioned time and time again, the investment markets are but information exchanges and while the majority of the information is in the public domain there are always things going on behind-the-scenes. Takeovers don’t happen overnight and this is an area which has proven to be particularly difficult to police.
Discussing ideas with other members
As the forum membership continues to grow there are many people with an array of different expertise and different opinions. If you have spotted a share which you believe may be about to break out of its trading range then by all mean add the chart and some background information for others to read. Investors by their very nature can be opinionated although there is nothing wrong in somebody having a different opinion to yours even if both parties can justify their opinion with facts and figures.
Once we as investors start to believe we know everything and have seen it and done it this can be very dangerous. Investment trends change, new investment strategies emerge on a regular basis and that is before we even begin to look at the type of businesses coming to the market. The ability to compare and contrast opinions with other members is invaluable and we can all learn something.