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# How is technical analysis done?

To understand technical analysis, you first need to understand the chart. There are four types of charts – line chart, bar chart, candlestick chart and point and figure chart. Among these, bar chart is the most popular and is used by most chartists.

## How is a bar chart prepared?

Bar charts have many vertical lines, which are called ‘bars’. In these, there are two very small horizontal lines on either side of each line. There are four notifications at once. The upper end of the bar indicates the highest price of the stock on a particular day, while the lower end indicates the lowest price of the stock on the same day. The small horizontal line on the left side of the bar indicates the opening price of the stock and the small horizontal line on the right side indicates the closing price of the stock.

Read more – What is share market and how it works

## How is a bar chart prepared?

The days are plotted on the In this chart, declining days (i.e. when the left horizontal line is up and the right side down) are shown in red or black, and rising days (i.e. when the left horizontal line is lower than the right) are shown in green or white. Is shown.

## What is the importance of volume in technical analysis?

Volume means the number of shares traded. Technical analysis is actually a science of reading the psychology of the entire market. So it is natural that the correct conclusion of this psychology can be drawn only when more and more people are participating; Because in low-volume stocks, prices are often controlled by a few operators.

## What is trend line?

In a bar chart, the line obtained by joining the daily highest and lowest prices of a stock with a straight line is called trend line. To draw a trend line for a falling stock, chartists draw a line from its highest price, while to draw a trend line for a rising stock, a line is drawn from its lowest price. For more accurate results, the line is drawn from an area of ​​density of the highest or lowest prices for several days instead of the highest or lowest price for a single day.

Read more – What is circuit and value averaging

Trend line is the best friend of traders, which is also called ‘Trend is the best friend’ in English. Trend breaking means that the trend of the share is going to change, that is, if the share price is falling and suddenly the share prices start moving downwards by cutting the trend line drawn from above, then it should be understood that the rise is about to start. . On the contrary, if the trend line drawn from the low price of a rising stock or index starts moving above the prices, then bullish deals should be cut.

## Meaning of stop loss in charts

Stopless is the price of a share or index, after reaching which the deals are cut, like in any chart of rising price, where the price cuts the trend line and goes downwards, then it is stopless. Similarly, in bearish deals, where you cross the trend line and come up, those deals are stopless. When stopless is increased or decreased with the price, it is called ‘tracking stopless