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levels. As a general rule, however, we are usually more interested in intraday price volatility and the tendency of prices to move in a given direction (either up or down) in a relatively short duration of time. We tend to subscribe to that market theory that states that all you need to know about a stock is reflected in its actual price from moment to moment. |
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The quote system any major DAET brokerage firm provides will produce charts and graphs of price movement over minutes, days, weeks, months, and years. Your trading system should also be able to publish real-time charts on all relevant indicators and even to superimpose one chart upon another. For example, if the index shows that the Nasdaq market is up 10 points, is this good news? You don't know until you know where the "up 10" came from. If the market had been up 20 points and was now only up 10, then the market is falling. The charts will give you a vivid picture and an instant grasp. An intraday chart can bring you up to date and "catch you up" with developments you may have missed. |
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Chart 6-2 contains two individual charts. The bottom chart is a picture of the Nasdaq 100 index for the day of March 4 displayed in 1-minute increments. You have already seen the ticker displaying the Nasdaq 100 stocks comprising the index in Chart 2-2. Note that the bottom chart in 6-2 is a graph while Chart 2-2 is a ticker. Any particular stock in the ticker (Chart 2-2) may or may not outperform the index pictured in the graph at the bottom of Chart 6-2. |
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The top box in Chart 6-2 superimposes a chart of Sun Microsystems, Inc., over the chart of the Nasdaq 100 index. By superimposing any stock chart over the Nasdaq 100 index chart you can better evaluate any stock's performance relative to the Nasdaq 100 index. Charts are extremely important until you have mastered trading techniques. Experienced traders are usually charting stocks in their head whether they realize it or not. They instinctively know the highs and the lows, levels of resistance and support, and other relevant data just as a homemaker knows sales prices of foodstuffs. The veteran DAET trader has no time to roll up a chart for a look-see because the trade is already gone by the time the chart can be read. |
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