Stock Charts For Dummies

Chapter 2

Using Charts to Minimize Your Emotional Roller Coaster

IN THIS CHAPTER

Preparing to own stocks

Evaluating individual stocks and index charts

Seeing trends

To minimize the risks of owning stocks, you need to develop strategies for reducing your emotional reactions to the ups and downs of the market. Instead, think of your portfolio purely as a business at which you want to make money. Don’t fall in love with any part of your portfolio. With the help of the fundamentals in this chapter, you can use stock charts to take the emotions out of your decision making.

Getting Ready for the Emotions of Owning a Stock

One of the hardest things to do is to watch your money invested in stocks drop in value on any given day for any reason. This emotional turmoil is one of the difficult parts of investing or trading in the stock market, especially for new entrants.

In the following sections, we describe two important actions you can take to prepare yourself for this turmoil: understanding a few basics of the stock market and arming yourself with information to level the playing field.

Understanding a few market basics

The benefit of the stock market is that you can make your stock ...