Chart Reading
Chart reading is essential especially when trading short term options. I use the candle stick chart because it makes it easier to see a trend. I also use two indicators on the chart to help spot new trends. The indicators that I use are the 5 day moving average and the 20 day exponential moving average. As you can see below I have a chart for VMWare (VMW) from OptionsXpress. This chart shows the price fluctuations by day for 6 months. However VMWare has only been public for about 3 months. Lets first look at the price flucuation candle for one day. On October 15 there is a red candle which means the price ended down from the day before. There are four points to look at. The top of the top wick shows us that the high for the day was 105.5, the top of the candle is the open for the day which was 104.49, the bottom of the candle is the close for the day 98.76 and the bottom of the bottom wick shows the low for the day at 96.29. On October 16 there is a green candle which means the price ended up from the day before. There are four points to look at. The top of the top wick shows us that the high for the day was 101.18, the top of the candle is the close for the day which was 99.9, the bottom of the candle is the open for the day 97.1 and the bottom of the bottom wick shows the low for the day at 95.02. The moving averages indicate a bullish or a bearish trend. As log as the 5 day moving average stays above the 20 day moving average we have a bullish trend. When the 5 day moving average moves below the 20 day moving average we have a bearish trend.
I really like your approach. So refreshing to see a sharing of knowledge rather than an expert who spends most of their time trying to convince me that he is an expert! We are all learners, so thanks for the honesty and good information.