Stock Chart Training with Charting Wealth: The Book, Chapter 1
Empower your investing by learning to read stock charts.
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What is the purpose of this book? To teach you how to read stock charts and the importance of doing so. Help us as we write and publish this book to you chapter by chapter. Your comments, edits and suggestions will be most appreciated and, when we publish the complete book, we will offer a discount and bonus to you, the fans and supporters of ChartingWealth.com who helped us along the way.
Let’s start with an introduction to the stock chart training material we will cover.
1. What is the purpose of this book? Why was it written? It’s very simple: to empower you to make money in the stock market.
2. What’s the big picture: to make money in the stock market, you must, first and foremost, be able to use and read the charts. The bottom line is ultra simple: we want to buy low and sell high.
3. You need to ask yourself a question: What do you want? Long-term wealth or short-term money. The second goal, short-term money, is probably hardest on a daily basis, but long-term wealth can be hard due to the long-term commitment. Whatever you desire, it is entirely possible, if you set up a simple, workable plan and commit yourself to it.
4. Plan: Daily training, listen to podcast, look at the charts, committing 5 to 10 minutes a day, every market day to stock chart training. The results will be slow, but they will be amazing and they will come. This is not a get-rich-quick scheme. It is simply a get rich plan.
5. We always remember Occam’s Razor (the complexity rule). We need to keep our analysis as simple as possible, but not simpler. We must constantly be trying to find easier, more sure-fired methods of predicting price movement.
6. What is our method? We look for changes in a larger time (long) period chart, followed by a reversal in a smaller time period (short) chart. This reversal in the short chart is called a “back-up.” We wait for the price movement to swing in the opposite direction on the short chart then move back in the direction of the long chart. When the second movement occurs, we look to jump into the market and ride the pre-existing long wave.
We like the MACD (Moving Average Convergence Divergence indicator) and the Derivative Oscillator Indicator to cross together.
We use the Heiken-Ashi Candlestick method of charting price movement.
7. The charting time frames we use are: the weekly, two-day and four-hour (half-day) charts. We want to also encourage experimentation. There is no wrong answer. The object is to always make money and to minimize risk. Always feel free to try any time frames.
8. We use the Heiken-Ashi (Average-Pace in Japanese) Candlestick method.
9. We love Trend lines. If we had nothing but price movement and could only choose one indicator, we would choose trendlines.
10. The MACD (Moving Average Convergence Divergence indicator) is our king of the indicators. We will explain the history of the indicator, its uses and faults. We explain crossings and how they work.
11. The Derivative Oscillator is use in conjunction with the MACD. We like to see crossings occur at the same time with the MACD and the Derivative Oscillator.
12. The Bollinger Bands: why we use them and what they mean to us as volatility bands.
13. The Method: How we employ the charts and find opportunities. Large chart reversals, small chart back ups and entry points.
14. Bigger picture: Stock Traders Almanac: priceless, necessary material. Trends are the key. Commit to 10 minutes a day when you first get in until you are done and keep reviewing.
15. Hopes and dreams through stock chart training: Wealth, but also empowerment and fun. Give back: share your knowledge and well.