How to Read Stock Charts

Print out a sample stock chart to examine (see 'Additional Resources,' below). Stock charts can be set up on a daily, weekly or long-term format, but they all follow the same basic plan. Start at the top where you will see the stock symbol and date of the chart. Also at the top are the day's high, low, and closing prices and the volume of shares traded.
Look just below the top line of information. You will see an entry that says MA(30), MA (60) or some other number. This is the moving average. It is the average price of the stock over recent past. The number in parentheses tells you how many days the moving average covers. At the very bottom of the chart there should be a bar graph. This gives you the volume of shares traded each day the chart covers.
Examine the main graph between the top and the volume bar graph at the bottom. Each day's trading is usually represented by a short bar or 'candlestick.' The top of the bar indicates the high for that day and the bottom the low. If there is a graph line passing through these bars, it indicates the closing price.
Notice which way the graph of the stock price is pointed. If it is headed toward the upper right corner, the stock is in an upward trend. If it's pointed at the bottom right, it is in a downward trend. Sometimes the graph doesn't seem to be moving one way or the other, and traders call this a period of consolidation.
Understand the function of a stock chart. The point is to spot trends early so you can buy early in an upward trend and sell early in a downward trend. Traders use a number of indicators to do this. For example, look for price supports. A price support is a price below which the stock rarely drops. When it approaches the price support, it's likely to reverse the downward trend and start moving up. A price resistance is the same thing in reverse: a price the stock falls short of. If it gets close, the stock price tends to reverse direction and decline.

How to Read Volume on a Stock Chart

Start with the information that appears across the top of the chart. The first items are the date the chart refers to along with the name and ticker symbol of the stock. Next, you'll find price information, giving the day's high, low and closing figures for the stock. Along with this, you'll read the volume on a stock chart. This is the daily volume of shares traded. There's usually one more piece of information listed, called the moving average. This is indicated by the letters MA followed by a number in parentheses and a price. This is the average price the stock traded over the number of days indicated by the number in parentheses.
Look at the rest of the stock chart. You will see two graphs, one in the middle of the page and a bar graph across the bottom. The one in the middle will consist of a line graph with the line bracketed by a bar (also called a candlestick) for each day the chart covers. This is really three graphs in one. Those bars don't refer to the day's volume but to the price range for the stock each day. The top of each bar or candlestick shows the daily high, and the bottom shows the low. The line graph itself shows the closing price.
Examine the bar graph at the very bottom of the page. This graph records the volume of shares traded for each day the chart covers. The height of the bar indicates the number of shares traded. Use the scale (usually located on the far left) to determine how many shares the height of each bar represents.
Learn how to read volume on stock charts in the context of the other information you see on the chart. Changes in the volume of trading can be very informative. For example, if you see an increasing number of shares being traded and the stock is in an upward trend, it indicates that investors are bidding up the stock price. An experienced trader will watch for a drop in that volume that may signal the upward climb in prices is reaching its peak.

How to Bid on the Stock Market

Choose a ticker symbol that interests you and that you would like to buy if the price is right. The stock market does not limit you to just corporate stocks. You can also bid on the purchase of gold, foreign stock market indexes or individual sectors through the use of exchange-traded funds and also government bonds.
Enter the ticker symbol for your desired investment instrument into your stock broker's trading platform, if it is an electronic system or call your broker to place an order.
Place a 'limit' order for your desired ticker at your bid price. When you make a bid, you are advertising to the market the price you are willing to pay for the instrument. A limit order locks in a maximum price you will pay and is the stock market's equivalent to raising a bid sign at a live auction. As part of your limit order, you must include the total number of shares you wish to purchase.
Wait for your order to be executed. If the stock market trades your desired instrument at a price that meets the criteria of your bid, your limit order will 'fill' and you will now own the shares. However, the key distinction of a limit order is that execution is not guaranteed. Thus, if other bidders are willing to pay more than your bid, the market will likely not trade down to your price, and your order will sit without execution.
Cancel the limit order at any time you choose if you either change your mind, want to enter a new bid, or accept that the market is unlikely to trade at your bid price so you get a fill.

How to Bet on the Stock Market

Learn about market behavior, financial and fundamental analysis, and technical analysis of trading charts. The more you know, the better your decisions will be, particularly in a fast-moving market. The North American Securities Administrators Association (NASAA) has a good online course in investing basics, and Investopedia has an introduction to technical analysis.
Practice your trading strategies using an online fantasy stock market. Read Investors Business Daily every day, and decide whether you want to buy, sell or wait for a better investing opportunity. Choose an ETF (exchange-traded fund) that interests you and fantasy trade that until you're ready to branch out into other stocks. Continue fantasy trading for at least three to six months. You are training yourself to react wisely to unexpected developments in the market and learning how the market moves in relation to economic indicators and company earnings reports.
Allocate only a small portion of your total trading account to your first few trades. Always keep a reserve in case you make a bad trading decision and take a substantial loss. As you make profits, take out and set aside your original investment amount in your trading reserve.
Control your risk by investing in mutual funds and ETFs, which give you maximum diversification for minimum investment. Diversification tends to protect against the risk of a single credit, or sector.
Use dollar cost averaging to avoid the risk of investing all your money at a market high. Invest a fixed amount at regular intervals in the same stock each time until you have established a full position. For most people, this means buying one or two different stocks, an ETF or a mutual fund. One of the best places to do this inexpensively is Sharebuilder.com. Investing a fixed amount at regular intervals in a variety of things does not achieve dollar cost averaging.

How to Invest in the Stock Market With Little Money

Open a discount brokerage account with a low minimum deposit requirement and low trade commissions. Some online brokers have no minimum deposit requirement to open an account and offer promotions and deals for free or cheap trade commissions.
Buy shares of a stock index fund, which is a low-fee mutual fund or exchange-traded fund that owns the same stocks as a particular stock index. An index is a group of stocks that represent a portion of the stock market. An index fund provides diversification, which spreads your money to many different investments. You can purchase index funds through your brokerage account or directly through certain fund providers.
Buy stock in a specific company using a direct stock purchase plan, or DSP. This plan is available through many large corporations, which allow you to buy stock in their company directly without using a broker. Matt Krantz says in his article 'Direct Stock Purchase is Cheap, but it Can Cost You Dearly' in 'USA Today' that the fees with a DSP are typically cheaper than buying stock through a brokerage account, but warns not to invest too much of your money in one stock.
Buy stock through a dividend reinvestment plan, or DRIP, which allows you to buy shares directly from a company and reinvest dividends in new shares. Many large companies have DRIPs that allow you to invest a small amount of money periodically and typically have low setup and maintenance fees. Many DRIPs require you to be an existing shareholder, so you may need to purchase a single share through your brokerage account before signing up for a plan.