How to read a Price Graph

source: http://www.att-trade.com

A stock's price graph is one of the tools a stock trader or investor needs to understand to make that decision to buy or sell.

Price graph is a historical data showing the price movement of a stock. In technical analysis price is the driving factor that makes an investor or trader buy or sell. Stock investors and traders have different techniques in their stock picking. Some buy when the stock price is below their valuation, some buy when the stock is about to go north, and some buy when the stock indicates a downtrend.

You might ask how in the world did they know that? They are able to do that by interpreting the price graph.

Again let me re-iterate that nobody can predict stock movement; only a probable trend can be made based on what is the current market demand-supply level.

Let us use the below price graph and other graph of CHIB as our example.

Most charting software has three to four graphs. The above is take from Citiseconline's charting in there website.


The graphs in the above picture are:
1. Price graph
2. Volume graph
3. MACD
4. Stochastic


Now let us focus on the Price graph

Legend:
SMA3 - Simple Moving Average 130 days
SMA2 - Simple Moving Average 65 days
SMA1 - Simple Moving Average 32 days
CHIB - Stock Code


Simple moving average as the name says is the average price of the stock for the specified number of days. So in the legend SMA1 is nearly the average for a month, SMA2 is for 2 months, and SMA3 is for nearly 5 months.


Why are these important?


These are used as indicator meaning they give an idea where is the direction of the stock. It also defines where are the possible support and resistance. I know these words seems gibberish, click here and here to know more.

Now you know that the 3 SMA's are the average of the stock's price for a certain period, compare such averages to the current price. If the Current price is above all it indicates that the stock going stronger thus it surpasses its average prices. This means the stock's price is trending up thus a good time to profit when you already have the stock. You can hold the stock for a while or as you wait for it to reach your estimated target price(which you can set by using some stock computation tool). Sell when the stock has reached your target price.

On the other when the current price crosses below the averages it means its price is trending down. If you have bought the stock lower than the current price it could be a good chance to take profits. But if you have bought it while it was above the average it is the best time to cost average. 


With this knowledge also remember that you have to verify such price trend. This could be verified in the Volume graph. The volume graph indicates the activeness of the stock. If the current price crosses the averages upward but there is no increase in volume then such movement is not verified thus it could only be that the stock is being played or such price uptrend is just circumstantial.


Other indicators are always included for further verification. MACD or Moving Average Convergence Divergence indicates whether the stock price has a bigger or smaller price change while Stochastic indicates whether the stock is overbought or oversold.

Again nobody can predict the exact movement of the stock; only probable outcomes. The price graph is a guide but no matter what happens it is still your call as an investor or trader to chose sell or buy button.


(I would like to thank my mommy Krissy for the volume verification, Tatay John316 for lessons on when to buy and sell, and Johnny Rocky for his explanation on the moving average)

Update regarding the NTS from COL

Have seen this update from Finance Manila regarding the ongoing switch from the Maktrade system to the NTS.

excerpt from financemanila.net.

Effective Monday 26 July 2010, the Philippine Stock Exchange will be implementing the new trading system with a new set of trading rules, as part of their commitment to enhance the trading experience and support systems for all investors, trading participants and PSE support groups.

In line with making such changes, COL will need to bring down the website from 3PM on July 23 (Friday) until July 25 (Sunday) to make the necessary changes and run testing with the PSE. All pending ATO and GTC orders will be flushed clean and will have to be re-posted by you on Monday morning July 26 at 9AM+.

Below are important changes to the Trading Rules that immediately affect your trading activities with CitisecOnline under the new PSE system:

1.    New Trading Schedule

There will now be a Pre-Close period prior to the Run-off Period of 12noon.

8:45 am - National Anthem

9:00 am - Pre-Open*

9:30 am - Market Open

11:57 am - Pre-Close *(NEW)

12:00 pm - Run-off / Trading at Last

12:10 pm - Market Close

* You can modify and/or cancel your orders during the Pre-Open period between 9:00am to 9:15am and the Pre-Close period of 11:57am to 11:58am.  During the periods of 9:15 am to 9:30 am and during 11:58 am-12:00 pm, modifications and/or cancellations of orders will be allowed by the system.

2.    New Board Lot and Price Fluctuation Table

The new board lot and price fluctuation table for all stocks listed in the PSE are as follows:

3.    Implementation of Trading Price Limits

The price of an order shall be within the Trading Limits for the Trading day.  There are two limits implemented; i.e., Static and Dynamic Thresholds.

The Static Threshold used to be known as the Floor and Ceiling Prices and is computed as follows:

-    The upper Static Threshold shall be fifty percent (50%) above the Reference price (closing price)

-    The lower Static Threshold shall be fifty percent (50%) below the Reference price (closing price)

The Dynamic Price Threshold** is computed as follows:

- Dynamic price threshold (upper) = last traded price + (last traded price multiplied by the dynamic tick)

- Dynamic price threshold (lower) = last traded price - (last traded price multiplied by the dynamic tick)

** An order entered breaching above or below the Dynamic Threshold will cause the security to be Frozen by the PSE stopping all trades until the PSE reactivates the security with a new Dynamic Threshold.

Example:

If the last traded price for stock A is 5.00 pesos and it has a PSE defined dynamic tick of 0.05 then:

- Stock A dynamic price threshold (upper) = 5.00 + (5.00 x 0.05) = 5.25

- Stock A dynamic price threshold (lower) = 5.00 - (5.00 x 0.05) = 4.75

4.    Closing Prices will now be calculated during the Pre-Close Period  which will be similar to pre-opening calculations of the opening price.

A Pre-close period (from 11:57-12:00) will be added similar to pre-open that will freeze matching for three minutes but allowing posting. Cancellations and modifications to orders are only allowed from 11:57-11:58 thereafter only posting of new orders are allowed until 12:00. Noon time will bring about a closing price that will match pre-close posted orders then continue trading at the closing price until 12:10.

5.    Partial matching of Odd-lot orders will now be allowed.

6.    Good-Till-Cancelled orders will now cover a period of seven (7) calendar days instead of seven (7) trading days.

All present GTC orders will be cancelled by end of day Friday July 23, 2010 to make way for the new data format on Monday. Placement of GTC orders will resume on July 26 Monday 9:00 AM. GTC orders may be entered during ATO (after trade hours). But GTC orders that have already been sent to the Exchange can only be cancelled or changed during allowable moments in pre-open (9:00-9:15) and during trading time. You can still send an advanced notice to cancel or change the GTC order during ATO periods but its effect on earmarked balances and positions will only take effect at 9:00 AM onwards.

7.    Please note that all other current order types in the COL system (Limit order, Day order, At-The-Open, and At-The-Close) will remain the same under the COL system.  There will be no added order types in the initial phase of the new system implementation. The PSE will in time introduce new order types to which we will inform you of its implementation. *Other brokerages’ online trading system may vary!

Will update you more regarding this new system. I just check my COL account and seems that there were glitches encountered today. I was placing an off-hours order yesterday but the usual off-hour page says "off-hour order closed". I hope COL can fix the problems and will be soon able to place orders during off hours.

Update regarding the NTS from COL

Have seen this update from Finance Manila regarding the ongoing switch from the Maktrade system to the NTS.

excerpt from financemanila.net.

Effective Monday 26 July 2010, the Philippine Stock Exchange will be implementing the new trading system with a new set of trading rules, as part of their commitment to enhance the trading experience and support systems for all investors, trading participants and PSE support groups.

In line with making such changes, COL will need to bring down the website from 3PM on July 23 (Friday) until July 25 (Sunday) to make the necessary changes and run testing with the PSE. All pending ATO and GTC orders will be flushed clean and will have to be re-posted by you on Monday morning July 26 at 9AM+.

Below are important changes to the Trading Rules that immediately affect your trading activities with CitisecOnline under the new PSE system:

1.    New Trading Schedule

There will now be a Pre-Close period prior to the Run-off Period of 12noon.

8:45 am - National Anthem

9:00 am - Pre-Open*

9:30 am - Market Open

11:57 am - Pre-Close *(NEW)

12:00 pm - Run-off / Trading at Last

12:10 pm - Market Close

* You can modify and/or cancel your orders during the Pre-Open period between 9:00am to 9:15am and the Pre-Close period of 11:57am to 11:58am.  During the periods of 9:15 am to 9:30 am and during 11:58 am-12:00 pm, modifications and/or cancellations of orders will be allowed by the system.

2.    New Board Lot and Price Fluctuation Table

The new board lot and price fluctuation table for all stocks listed in the PSE are as follows:

3.    Implementation of Trading Price Limits

The price of an order shall be within the Trading Limits for the Trading day.  There are two limits implemented; i.e., Static and Dynamic Thresholds.

The Static Threshold used to be known as the Floor and Ceiling Prices and is computed as follows:

-    The upper Static Threshold shall be fifty percent (50%) above the Reference price (closing price)

-    The lower Static Threshold shall be fifty percent (50%) below the Reference price (closing price)

The Dynamic Price Threshold** is computed as follows:

- Dynamic price threshold (upper) = last traded price + (last traded price multiplied by the dynamic tick)

- Dynamic price threshold (lower) = last traded price - (last traded price multiplied by the dynamic tick)

** An order entered breaching above or below the Dynamic Threshold will cause the security to be Frozen by the PSE stopping all trades until the PSE reactivates the security with a new Dynamic Threshold.

Example:

If the last traded price for stock A is 5.00 pesos and it has a PSE defined dynamic tick of 0.05 then:

- Stock A dynamic price threshold (upper) = 5.00 + (5.00 x 0.05) = 5.25

- Stock A dynamic price threshold (lower) = 5.00 - (5.00 x 0.05) = 4.75

4.    Closing Prices will now be calculated during the Pre-Close Period  which will be similar to pre-opening calculations of the opening price.

A Pre-close period (from 11:57-12:00) will be added similar to pre-open that will freeze matching for three minutes but allowing posting. Cancellations and modifications to orders are only allowed from 11:57-11:58 thereafter only posting of new orders are allowed until 12:00. Noon time will bring about a closing price that will match pre-close posted orders then continue trading at the closing price until 12:10.

5.    Partial matching of Odd-lot orders will now be allowed.

6.    Good-Till-Cancelled orders will now cover a period of seven (7) calendar days instead of seven (7) trading days.

All present GTC orders will be cancelled by end of day Friday July 23, 2010 to make way for the new data format on Monday. Placement of GTC orders will resume on July 26 Monday 9:00 AM. GTC orders may be entered during ATO (after trade hours). But GTC orders that have already been sent to the Exchange can only be cancelled or changed during allowable moments in pre-open (9:00-9:15) and during trading time. You can still send an advanced notice to cancel or change the GTC order during ATO periods but its effect on earmarked balances and positions will only take effect at 9:00 AM onwards.

7.    Please note that all other current order types in the COL system (Limit order, Day order, At-The-Open, and At-The-Close) will remain the same under the COL system.  There will be no added order types in the initial phase of the new system implementation. The PSE will in time introduce new order types to which we will inform you of its implementation. *Other brokerages’ online trading system may vary!

Will update you more regarding this new system. I just check my COL account and seems that there were glitches encountered today. I was placing an off-hours order yesterday but the usual off-hour page says "off-hour order closed". I hope COL can fix the problems and will be soon able to place orders during off hours.

Update regarding the NTS from COL

Have seen this update from Finance Manila regarding the ongoing switch from the Maktrade system to the NTS.

excerpt from financemanila.net.

Effective Monday 26 July 2010, the Philippine Stock Exchange will be implementing the new trading system with a new set of trading rules, as part of their commitment to enhance the trading experience and support systems for all investors, trading participants and PSE support groups.

In line with making such changes, COL will need to bring down the website from 3PM on July 23 (Friday) until July 25 (Sunday) to make the necessary changes and run testing with the PSE. All pending ATO and GTC orders will be flushed clean and will have to be re-posted by you on Monday morning July 26 at 9AM+.

Below are important changes to the Trading Rules that immediately affect your trading activities with CitisecOnline under the new PSE system:

1.    New Trading Schedule

There will now be a Pre-Close period prior to the Run-off Period of 12noon.

8:45 am - National Anthem

9:00 am - Pre-Open*

9:30 am - Market Open

11:57 am - Pre-Close *(NEW)

12:00 pm - Run-off / Trading at Last

12:10 pm - Market Close

* You can modify and/or cancel your orders during the Pre-Open period between 9:00am to 9:15am and the Pre-Close period of 11:57am to 11:58am.  During the periods of 9:15 am to 9:30 am and during 11:58 am-12:00 pm, modifications and/or cancellations of orders will be allowed by the system.

2.    New Board Lot and Price Fluctuation Table

The new board lot and price fluctuation table for all stocks listed in the PSE are as follows:

3.    Implementation of Trading Price Limits

The price of an order shall be within the Trading Limits for the Trading day.  There are two limits implemented; i.e., Static and Dynamic Thresholds.

The Static Threshold used to be known as the Floor and Ceiling Prices and is computed as follows:

-    The upper Static Threshold shall be fifty percent (50%) above the Reference price (closing price)

-    The lower Static Threshold shall be fifty percent (50%) below the Reference price (closing price)

The Dynamic Price Threshold** is computed as follows:

- Dynamic price threshold (upper) = last traded price + (last traded price multiplied by the dynamic tick)

- Dynamic price threshold (lower) = last traded price - (last traded price multiplied by the dynamic tick)

** An order entered breaching above or below the Dynamic Threshold will cause the security to be Frozen by the PSE stopping all trades until the PSE reactivates the security with a new Dynamic Threshold.

Example:

If the last traded price for stock A is 5.00 pesos and it has a PSE defined dynamic tick of 0.05 then:

- Stock A dynamic price threshold (upper) = 5.00 + (5.00 x 0.05) = 5.25

- Stock A dynamic price threshold (lower) = 5.00 - (5.00 x 0.05) = 4.75

4.    Closing Prices will now be calculated during the Pre-Close Period  which will be similar to pre-opening calculations of the opening price.

A Pre-close period (from 11:57-12:00) will be added similar to pre-open that will freeze matching for three minutes but allowing posting. Cancellations and modifications to orders are only allowed from 11:57-11:58 thereafter only posting of new orders are allowed until 12:00. Noon time will bring about a closing price that will match pre-close posted orders then continue trading at the closing price until 12:10.

5.    Partial matching of Odd-lot orders will now be allowed.

6.    Good-Till-Cancelled orders will now cover a period of seven (7) calendar days instead of seven (7) trading days.

All present GTC orders will be cancelled by end of day Friday July 23, 2010 to make way for the new data format on Monday. Placement of GTC orders will resume on July 26 Monday 9:00 AM. GTC orders may be entered during ATO (after trade hours). But GTC orders that have already been sent to the Exchange can only be cancelled or changed during allowable moments in pre-open (9:00-9:15) and during trading time. You can still send an advanced notice to cancel or change the GTC order during ATO periods but its effect on earmarked balances and positions will only take effect at 9:00 AM onwards.

7.    Please note that all other current order types in the COL system (Limit order, Day order, At-The-Open, and At-The-Close) will remain the same under the COL system.  There will be no added order types in the initial phase of the new system implementation. The PSE will in time introduce new order types to which we will inform you of its implementation. *Other brokerages’ online trading system may vary!

Will update you more regarding this new system. I just check my COL account and seems that there were glitches encountered today. I was placing an off-hours order yesterday but the usual off-hour page says "off-hour order closed". I hope COL can fix the problems and will be soon able to place orders during off hours.

Bear - Bull Market: In the Black, in the Red

source: http://www.indianmoney.com/

I know you heard these terms during the market crash last year. And I know you googled these terms but lets try to remember them and understand what these words really meant.

As usual lets barrow Wikipedia's definition. There simpler and easy to understand:

A bull market is associated with increasing investor confidence, and increased investing in anticipation of future price increases (capital gains). A bullish trend in the stock market often begins before the general economy shows clear signs of recovery. It is a win-win situation for the investors.

A bear market is a general decline in the stock market over a period of time.It is a transition from high investor optimism to widespread investor fear and pessimism. According to The Vanguard Group, "While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period.

 In a Bull market the price of stocks are rising or there is what we call an uptrend because investors, like you and me and the rest of the investing public, sees a recovery or a possible gain in a stocks performance or the general economy has been doing good and thus it creates a positive outlook in the next period. In an uptrend the real winners are the ones that have bought stocks at a near bottom price. This is what we call taking profits. For example you were able to buy shares of Company Willsoongoup when it was still at 1 peso per share, after the fiscal period or after some time the Willsoongoup company reported a good performance at the same time the general economy is good and investor confidence is back. Stock prices begin to rise and in time your one peso Willsoongoup stock now has a market value of 12 peso per share. and in general the market is like that. That is what we call a Bull market and selling your Willsoongoup stock which you bought at one peso and earning while it is at that level is taking profits.

Bull markets sometimes have a sudden swing going down but the term applies to the general market. So in some areas some may not performing well but in general the market,when we say market we mean particular market like PSE or NYSE, in our case the mining sector has always been down but the general PSE is up. 

Again the winners in a Bull market are those that have bought the shares at a lower price and able to take profits. If you were about to buy stocks you are in a way in the losing side because you are buying the stock at a very high cost. That is why Bull market is sometimes called seller's time.

In a Bear market there is a general decline in stock prices over a period of time. Just like what happen when the financial crisis erupted affecting the US market and then other markets followed. In such situation one must sell their stock before it goes below your cost. This time its called a buyer's time or bargain. Stock prices are low that you can stretch the buying power of your money. But in this time as well buy stocks that has good fundamentals. Stocks of blue chips companies would be good but also their are good companies that has some intrinsic value. Always review their financial statement and determine growth and profitability performances. 

A bargain does not necessarily mean a good buy. Choosing the right stocks while they are at a bargain price gives you better chances of earning when the stock market starts to pick up. 

On the other hand the terms in the Black and In the Red is a way of categorizing stock trading performance. When the stock is in the Black it means it is on the gainers side. These stocks have perform well in that particular stock trading session. In the Red means the stock has decline making it in the decliners board. In the past stock decliners are known by writing them in the board using red ink thus the term in the red, while gainers are since written in the normal ink which is black thus gainers ended up being term in the black.

Bear - Bull Market: In the Black, in the Red

source: http://www.indianmoney.com/

I know you heard these terms during the market crash last year. And I know you googled these terms but lets try to remember them and understand what these words really meant.

As usual lets barrow Wikipedia's definition. There simpler and easy to understand:

A bull market is associated with increasing investor confidence, and increased investing in anticipation of future price increases (capital gains). A bullish trend in the stock market often begins before the general economy shows clear signs of recovery. It is a win-win situation for the investors.

A bear market is a general decline in the stock market over a period of time.It is a transition from high investor optimism to widespread investor fear and pessimism. According to The Vanguard Group, "While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period.

 In a Bull market the price of stocks are rising or there is what we call an uptrend because investors, like you and me and the rest of the investing public, sees a recovery or a possible gain in a stocks performance or the general economy has been doing good and thus it creates a positive outlook in the next period. In an uptrend the real winners are the ones that have bought stocks at a near bottom price. This is what we call taking profits. For example you were able to buy shares of Company Willsoongoup when it was still at 1 peso per share, after the fiscal period or after some time the Willsoongoup company reported a good performance at the same time the general economy is good and investor confidence is back. Stock prices begin to rise and in time your one peso Willsoongoup stock now has a market value of 12 peso per share. and in general the market is like that. That is what we call a Bull market and selling your Willsoongoup stock which you bought at one peso and earning while it is at that level is taking profits.

Bull markets sometimes have a sudden swing going down but the term applies to the general market. So in some areas some may not performing well but in general the market,when we say market we mean particular market like PSE or NYSE, in our case the mining sector has always been down but the general PSE is up. 

Again the winners in a Bull market are those that have bought the shares at a lower price and able to take profits. If you were about to buy stocks you are in a way in the losing side because you are buying the stock at a very high cost. That is why Bull market is sometimes called seller's time.

In a Bear market there is a general decline in stock prices over a period of time. Just like what happen when the financial crisis erupted affecting the US market and then other markets followed. In such situation one must sell their stock before it goes below your cost. This time its called a buyer's time or bargain. Stock prices are low that you can stretch the buying power of your money. But in this time as well buy stocks that has good fundamentals. Stocks of blue chips companies would be good but also their are good companies that has some intrinsic value. Always review their financial statement and determine growth and profitability performances. 

A bargain does not necessarily mean a good buy. Choosing the right stocks while they are at a bargain price gives you better chances of earning when the stock market starts to pick up. 

On the other hand the terms in the Black and In the Red is a way of categorizing stock trading performance. When the stock is in the Black it means it is on the gainers side. These stocks have perform well in that particular stock trading session. In the Red means the stock has decline making it in the decliners board. In the past stock decliners are known by writing them in the board using red ink thus the term in the red, while gainers are since written in the normal ink which is black thus gainers ended up being term in the black.

Bear - Bull Market: In the Black, in the Red

source: http://www.indianmoney.com/

I know you heard these terms during the market crash last year. And I know you googled these terms but lets try to remember them and understand what these words really meant.

As usual lets barrow Wikipedia's definition. There simpler and easy to understand:

A bull market is associated with increasing investor confidence, and increased investing in anticipation of future price increases (capital gains). A bullish trend in the stock market often begins before the general economy shows clear signs of recovery. It is a win-win situation for the investors.

A bear market is a general decline in the stock market over a period of time.It is a transition from high investor optimism to widespread investor fear and pessimism. According to The Vanguard Group, "While there’s no agreed-upon definition of a bear market, one generally accepted measure is a price decline of 20% or more over at least a two-month period.

 In a Bull market the price of stocks are rising or there is what we call an uptrend because investors, like you and me and the rest of the investing public, sees a recovery or a possible gain in a stocks performance or the general economy has been doing good and thus it creates a positive outlook in the next period. In an uptrend the real winners are the ones that have bought stocks at a near bottom price. This is what we call taking profits. For example you were able to buy shares of Company Willsoongoup when it was still at 1 peso per share, after the fiscal period or after some time the Willsoongoup company reported a good performance at the same time the general economy is good and investor confidence is back. Stock prices begin to rise and in time your one peso Willsoongoup stock now has a market value of 12 peso per share. and in general the market is like that. That is what we call a Bull market and selling your Willsoongoup stock which you bought at one peso and earning while it is at that level is taking profits.

Bull markets sometimes have a sudden swing going down but the term applies to the general market. So in some areas some may not performing well but in general the market,when we say market we mean particular market like PSE or NYSE, in our case the mining sector has always been down but the general PSE is up. 

Again the winners in a Bull market are those that have bought the shares at a lower price and able to take profits. If you were about to buy stocks you are in a way in the losing side because you are buying the stock at a very high cost. That is why Bull market is sometimes called seller's time.

In a Bear market there is a general decline in stock prices over a period of time. Just like what happen when the financial crisis erupted affecting the US market and then other markets followed. In such situation one must sell their stock before it goes below your cost. This time its called a buyer's time or bargain. Stock prices are low that you can stretch the buying power of your money. But in this time as well buy stocks that has good fundamentals. Stocks of blue chips companies would be good but also their are good companies that has some intrinsic value. Always review their financial statement and determine growth and profitability performances. 

A bargain does not necessarily mean a good buy. Choosing the right stocks while they are at a bargain price gives you better chances of earning when the stock market starts to pick up. 

On the other hand the terms in the Black and In the Red is a way of categorizing stock trading performance. When the stock is in the Black it means it is on the gainers side. These stocks have perform well in that particular stock trading session. In the Red means the stock has decline making it in the decliners board. In the past stock decliners are known by writing them in the board using red ink thus the term in the red, while gainers are since written in the normal ink which is black thus gainers ended up being term in the black.