Trading stocks vs Investing stocks

A stock is a security that represents a fractional ownership in a company. When you buy a company's stock, you're purchasing a small piece of that company, called a share. Investors purchase stocks in companies they think will go up in value. For an investor it is more seen to buy and hold stocks for years. Investors usually are interested in a companies long term goals. gross annually, what products are the company producing, will the company last long term? it is very important to invest in companies that seek growth over the long term because they better there company is, the more people will be willing to invest in shares which drive the stock price up over time. from a long term perspective it is different tax breaks incentives as well. For example, if i buy 1,000 dollars of Apple stock in Feb. 7th 2022. one year and one day from the purchase date you will not have to pay any taxes on any gains that may have occurred. Investing has its other great benefits to it as well. One of these great benefits is called a dividend.A dividend is a company's payment, based on profit, to the people who own stock in the company. Dividend payments are based on the class of the stock, the stock price and the number of shares an investor has in a company. Dividends are frequently paid in cash to investors but may come in other forms of compensation. investors tend to look at the fundamentals when it comes to looking to buy or sell there shares.

Trading is different from investing because the time of buy and sell is shorter and in a certain time frame based on the trader.

What is More benefical to your life?

Do you have a regular 9-5 job? if so, swing trading would be the best trading style for you. With your busy work schedlue you woukld not have time to be in front of the trading screens all day. With swing trading you only have to check the markets 3 times a day. The Stock Market opens up at 8 am(ET). and closes at 4pm(ET). Than around lunch time would be another great time to see how markets are moving but it is not required.

Three Types of Stock Charts

A stock chart is a graph that displays the price of a stock—or any type of investment asset—over a period of time. It typically shows the current price, historical highs and lows, and trading volumes on a stock chart Price charts visualize the trading activity that takes place during a single trading period (whether it's five minutes, 30 minutes, 4Hour, one day, and one week). Generally speaking, each period consists of several data points, including the opening, high, low, and/or closing prices. When reading stock charts, traders typically use one or more of the three types—line, bar, and candlestick.

Line Chart

Perhaps the most basic price chart is the line chart. It plots a single line that connects all the closing prices of a stock for a certain time interval. It's simple to follow, but the line chart may not tell traders much about each day's activity. It will, however, help traders see trends easily and visually compare the closing price from one period to the next. Because many brokerages place the valuation of an account on the closing price, this method has some value when correlating a stock's trend or overall performance to the market without being too concerned about intraday fluctuations.

Bar Chart

The bar chart is another way to chart price activity. Bar charts help traders see the price range of each period. Bars may increase or decrease in size from one bar to the next or over a range of bars. Notice how the bars expand and contract between periods of high and low volatility. As the market becomes increasingly volatile, the bars become larger and the price swings further. As the market becomes quieter, price typically contracts into smaller bars. The fluctuation in bar size is because of the way each bar is constructed. The vertical height of the bar reflects the range between the high and low price of the bar period. The price bar also records the period's opening and closing prices with attached horizontal lines; the left line represents the open, and the right line represents the close.

Candle stick chart

The candlestick chart is a variation of the bar chart. Candles help visualize bullish or bearish sentiment by displaying distinctive "bodies" that are green or red, depending on whether the stock closes higher or lower than the open. The body represents the range between the opening and closing prices of the time intervals; the high and low prices are called the wick or shadow (see the chart below). Candles help analysts see how prices move in a trending market. In a normal bull market, there might be more clusters of green candles than red candles, while the reverse is true for a bear market. Certain combinations of candles create patterns that traders may use as entry or exit signals.

Whats the difference between a bar chart and a candlestick chart?

Bar charts and candlestick charts show the same information, just in a different way. Candlestick charts are more visual due to the color coding of the price bars and thicker real bodies. Highlighting prices this way makes it easier for some traders to view the difference between the open and close

Candlesticks

In stock trading, a candlestick is an illustration of a stock price’s daily fluctuation. The length of the bar tells you the difference between the opening and closing price. The lines extending beyond the bar, sometimes called shadows, wicks, or tails, show whether or not the price extended higher or lower than the open or close before retreating. The color of the candlestick tells you if the stock closed above or below its opening price. Green candle sticks represent that bulls are in control. Red candlesticks represnt that the bears are in control.

These candlesticks originated in Japan more than two centuries ago. Munehisa Homma used drawings to indicate how much the price of rice fluctuated during a day. It wasn’t until the 1980s that these drawings became known in the West. Steve Nison introduced them as “Japanese candlestick charting techniques” in a book by the same name. The idea behind candlesticks is that patterns emerge, which a sophisticated trader can spot. Those patterns supposedly signal trends, reversals, and breakouts (prices outside of a normal volatility range) that are about to occur.

What does a candlestickk show?

A candlestick theoretically shows the attitude of the current marketplace regarding a stock or other security. A long body (the distance between the opening and closing price) indicates the direction the stock price is moving. A tall green bar signals that the bulls are in charge, pushing prices up. A tall red bar shows pessimism ruling the market, pulling prices down with bearish sentiment. Short bodies suggest that the bulls and bears are relatively balanced. That could indicate that momentum is slowing down. For example, a short-bodied candle coming after a series of tall green candles might suggest the price is reaching a resistance level. The shadows (the lines above and below the body) also provide essential information. When a shadow forms, it means that traders tested a higher or lower price, which gets rejected. The length of a top shadow is the distance between the highest price of the day and the closing price. That means that the higher price couldn’t sustain itself, and it fell to the closing price. For instance, a stock price might have gone up to $25 for a few hours, then fell back to $23, leaving a $2 shadow. The fact that the higher price was rejected might convey some important information.

Wait one sec! What does it mean to be Bullish or Bearish?

How do we actually read a candlestick chart?

On a candlestick chart you will see multiple candlesticks moving, sideways, up and down. amongst these moves we call these chart patterns. stock candle sticks move in consolidation phases, uptrend phases, and downtrend phases

Within these phases we have 2 types of patterns. We have a reversal pattern and a continuation pattern. Within these patterns we have supports and resistances.

Support

is essentially a floor for stock prices. It's a level where a stock trending down stops sinking and reverses course. At some point, the sellers stop selling, the buyers take control, and the stock starts rising again. At this inflection point, the stock puts in a low price that we call "support." After a rally, if the stock reverses course once again and starts to come back down to test the support level, it will likely require significantly more conviction (i.e., volume) by sellers to penetrate the level and push down through support. If the stock does not penetrate support, this only strengthens the support level and provides a good indication for short sellers to rethink their positions because buyers will likely start to take control.

Resistance

is the exact opposite of support. It acts as a ceiling for stock prices at a point where a stock that is rallying stops moving higher and reverses course. Buyers will need more conviction to penetrate resistance levels in future rallies. It's important to understand support and resistance are merely psychological levels, but they can nevertheless be useful for traders who are developing a trading plan.