Finance

Broadening formation shows wider price fluctuations after a trend. This type of chart pattern contrasts well with the triangle chart pattern, where the trading range narrows down before a breakout. Prices fluctuate in such a way that if you connect the highs and lows, the price action will be within two diverging trendlines, one rising and one falling. Here is how a … [Read more...] about What is broadening formation in price chart

In the world of stock trading, recognizing chart patterns is crucial for making informed decisions. Two significant patterns that traders often analyze are the Double Top and Double Bottom. These formations provide insights into potential market reversals and can greatly influence trading strategies. This article will explore the meanings, characteristics, and … [Read more...] about Understanding Double Top and Double Bottom Patterns in the Stock Market

Chart patterns like a triangle, flag, pennant, wedge, rectangle, head and shoulders, and cup and handle occur when the price of the underlying asset moves in a way that resembles these common shapes.  These kinds of price patterns help traders to have a logical entry point, a stop loss location and price target to manage the risk reward ratio of a trade. The Cup and … [Read more...] about What is Cup and Handle Price Pattern

Rounding bottoms occur at the market bottom while rounding tops develop at market top. These chart patterns indicate a potential reversal point on a price chart. Rounding top is also referred to as the “inverse saucer” pattern. It appears as an inverted ‘U’ shape. On the other hand, the rounding bottom appears as a clear “U” shape on the price chart. It is referred to as … [Read more...] about What is rounding top and bottom price pattern in stock market

If you're new to the stock market, terms like "gap up" and "gap down" might seem confusing at first. These terms refer to sudden price changes in stocks that happen between one trading day and the next, often creating an empty space or "gap" on stock charts. Understanding what these gaps mean, how they happen, and how traders use them can help you navigate the stock market more … [Read more...] about Understanding Gap Up and Gap Down in the Stock Market: A Comprehensive Guide for Beginners

Breakout means the stock quickly turns upward from a sideways move making a new high. In a downtrend, if the stock moves below a support level after trading sideways, then it's called continuation breakout to the downside. Breakouts create excellent trading opportunities for traders. Breakout traders live by the motto, “No price is too high to buy and no price is too low … [Read more...] about What is breakouts and breakdowns in stock trading

A channel forms when the price action of a stock or asset is controlled by 2 parallel, sloping lines. To know how effective the channel lines are, you must make sure that it has tested each of these lines at least twice. Please note, we are not talking about television channels. These are trend channels drawn on price charts in order to understand price action, sometimes … [Read more...] about Parallel uptrend and downtrend price channels in trading

Margin trading refers to the process of borrowing money from your broker in order to leverage your available capital to trade in stocks.  Remember, stocks and options can be traded in either cash or margin account, short sales of stocks can only be traded in a margin account. To start margin trading you need to have a margin account with a brokerage firm. This … [Read more...] about Understanding margin trading in stock market

You may have heard the saying “the trend is your friend”. The old saying “The trend is your friend” is a constant reminder that you always want to be on the more dominant side of price action. To understand what it is, you have to first understand, what is the trend? By recognizing whether the bulls or bears are the more dominant group, you can be conscious of the trend … [Read more...] about The trend is your friend-Uptrend, Downtrend and Sideways in stock market