Hello, everyone, and welcome to Schwab Coaching. My name is Cameron May. I'm a Senior Manager here at Schwab, and this is Getting Started with Technical Analysis, and today is a big day. If you are brand new to this world of stock charts, this is going to be a series of webcasts that you won't want to miss. This is going to be Lesson One in a series of planned eight webcasts that we're going to be doing each Tuesday for the next eight weeks. But today, we're going to be providing just an introduction to the concept of technical analysis and getting an introduction as well to the setting up of one's very first chart on Thinkorswim on the desktop platform. So it should be a great discussion before we can get into that, though.
Let me first of all say hello to everybody that's already chatting out there on YouTube. Hello there, Kevin and Bob, Speak Truth, George, David, Ocean Life, Gene, Jeff, TMTM, SJS, Ricebird, everybody else. Thanks for joining us week after week. We really do appreciate your attendance and your contributions to these discussions. And if you are here for the very first time, I want to welcome you as well. And as a matter of fact, of course, today's presentation is very much geared toward you. So enjoy the show. But if you're watching on the YouTube archive after the fact, enjoy that presentation. But be aware that you're invited to join us in the live discussion. It does kick off promptly. This webcast series starts right at two o'clock Eastern time on Tuesdays.
We'd love to have you here for the live webcast. The archives are fantastic as well. And I also want to point out that my very good friend, Ben Watson, is hanging out in the chats with us today. Ben and I have been working together now for, boy, Ben, it's been almost 20 years. So Ben's going to be there answering any questions that I can't get to. They're coming in from the live audience. Thanks for being there, Ben. And finally, Ben and I would also like to issue an invitation to you. If you're not following us on X, that's a great platform, great place to connect with your favorite presenters in between the videos or the live streams. You can find Ben on X at Ben Watson CS.
You can find me there at Cameron May CS, but let's get into this introduction to technical analysis. And as we do, of course, the very first thing we need to do is pause to consider the risks associated with investing. The information here is for general informational purposes only and should not be considered an individualized recommendation or endorsement of any particular security, chart pattern, or investment strategy. While this webcast discusses technical analysis, other approaches, including fundamental analysis, may assert very different views. Schwab does not recommend the use of technical analysis. The use of technical analysis is a sole means of investment research and investing involves risks, including loss of principle. Okay. So let's take a look at what these next eight weeks, or if you're watching on the videos, the eight lessons are going to address.
And really, the purpose here is to help that trader out there who's maybe peeked over the shoulder of other more veteran users of stock charts. So they may be looking and wondering what is it that they're looking for on that mysterious chart? What are all of those fancy things they have applied to their chart? How does a trader go about making a plan based on a plan for trading based on what they're seeing from a stock chart? So we're going to start off with a basic introduction to this field or this discipline known as technical analysis, which is just using charts in the planning of traits. Okay. So then we're going to get a deeper dive into, into our charts in our next lesson, in Lesson Two, Lesson Three is going to be all about, I, uh, identifying trends for some traders.
They consider it to be, um, elemental to their approach to find out which direction a stock is heading first, and then maybe to trade in that direction. Not everybody does it that that way, but that can be a priority for a number of traders. Then we'll talk about support and resistance or price floors and price ceilings. We will spend Lesson Five reviewing technical indicators or studies, those fancy tools that can be applied to a stock chart. Then we'll get into specific entry and exit example signals. We'll spend Lesson Lesson seven is going to be about price patterns, behaviors, historical behaviors on a stock chart that some see as carrying future implications for the way the stock might behave in the future.
And then finally, we're going to wrap it all up with how one might construct an investing plan for using charts for the planning of trades. Okay. So that's going to be our series of lessons. I hope that you'll give them each some, some attention, particularly if you are at the front end of your own personal learning curve with charts, but let's get right into it. The first thing that I want to do is lay out an agenda for this discussion, three items on the agenda. We're going to talk about just the concept of technical analysis using charts, the what, what a trader might be looking for, why they might look for it, which is going to include a discussion of the sort of the underlying principles of technical analysis.
And then we're going to provide an introduction, the charts using a thinkorswim desktop software platform. So I'm going to go to thinkorswim today including showing how it can be downloaded and accessed, but then we're going to go right to charts and do a basic setup there. Okay. So starting our discussion, what are some of the goals? What is, what is the purpose of performing technical analysis? Well, really there are two conceptual approaches to stock investing or trading. Now they're conceptually, there could be, be more than that, but quite commonly we'll find ourselves lumping to our, our basic approaches to trading or investing into two categories, pretty distinct. One of these categories specifically employs stock charts in the planning and placing of trades and other one doesn't.
So technical analysis is the study of historical price and volume to identify and project a price trend using charts. So for some traders, it is not a, not just an element of their planning for the, for a stock trade, but it might be absolutely essential to the planning of their trade. It might even be their only approach, but yes, using charts is is a one possible approach. The goal there being hopefully with careful observation of historical movements on a chart and careful application of, of tools to a chart, it might provide a trader with conceptually, um, enhanced portfolio performance. Now that's what the objective is. It doesn't always work out that way, but yes, technical analysis uses charts. Fundamental analysis quite in contrast is ignoring the charts in favor of looking at the company behind the stock.
So this is, this is the, this is the discipline or the approach of analyzing a company's financial statements and scouring through their balance sheets and their income statements and looking for indications of potential value value or indications of potential value. Or indications of potential value. That there might be growth ahead for the company based on the company's performance. So yeah, that might, that, that really is setting the charts aside and looking at at how's the company behind the chart doing? Is it a healthy company or not? Making trade decisions there? Now for some, of course, there can be a blend of those two approaches, and that might be built into the plan that we'll talk about in lesson eight. But for this series, we're going to be focusing primarily on this discipline than technical analysis.
And that, that can be governed conceptually by three basic tenets. So let's talk about the tenets of technical analysis. Okay. There are three basic tenants. Number one, being that prices move in trends. Number two, the market discounts everything. And number three, the history repeats itself, where that it looks similar. So just examining each of those three points in a little bit greater detail, quite commonly a technical trader enters the, enters the, the effort to plan a trade under the assumption that prices do tend to move in trends. When a bullish trend has been established, it will tend to persist until something significant changes. It bearish trend when it's been established will tend to persist, and it bears a sideways trend when it has been established will tend to persist for some period of time.
And they'll structure that the rest of their trade approach around that assumption. Now I'm already starting to use terminology. It's not going to be entirely familiar to everyone. So for example, the word bullish, I know from many, many years of repetition, bullish means the trader thinks the stock is going up for, or the stock has been going up; bearish means the stock is going down sideways. I don't have to explain, but basically bullish and bearish, at least the way that I think about this and the way that it's been explained to me and the way that I conceptualize it is that a bull and bear are used based on the way that those two animals attack; a bull swipes its horn up with a, with an attack, so upward; a bear swipes its paw downward, so it's attack is D is downward.
So that you know, from, from their stems that the phrase 'bearish' in any case, but that is the, that is a primary technical analysis. The second is that the market discounts everything. So for a pure technician, someone that just uses charts, this is a very common, common phrase that's that's used. And the word 'discounts' though, is something that I do want to be very clear on, because to say that you're discounting, something means that we might be ignoring it. Now in this case, what we're referring to here is the technical assumption that the reason that the trader feels comfortable in ignoring the fundamentals of a company or its situation relative to his competitors or the executives at the wheel or news events that are about to happen.
Or that are on the calendar, all of those things, the trader assumes, well, the collective wisdom of the marketplace has already taken all of those factors in consideration. Spending all that time doing that fundamental research for a technical trader might be unnecessary because the assumption there being the market has already implemented that into the direction of the price and the current movement of the price. The market discounts, everything. It includes everything. So the trader might feel like going to the market, going out and performing additional research, additional analysis isn't going to allow them to discover things that the market isn't already aware of. So it's as well just look at the, look at the chart and go with that. That's a, that's a concept here. Is it entirely accurate?
Nothing's a guarantee, right? But that is one of the, one of the underlying assumptions of technical analysis. And the final one is that history repeats itself or that it looks similar. Obviously we'd say it ever at the start of every discussion, history is no guarantee of future performance, right? But for a technical trader, if they observe or over a period or a long period of time that a stock has been going up and down and up and down, let's say between $40 and $50, it might make sense that maybe the next time it goes down to 40, maybe history will repeat itself and it go back up to 50. And, and this being based on the fact that humans tend to react similarly as a group in similar situations.
So, um, under, under a given set of economic conditions, for example, maybe the markets will behave similarly, similarly to how they behaved under those same set of conditions or similar conditions historically. So, in any case, there are three tenets of technical analysis: price moves and trends, the market discounts everything, and history repeats itself or looks similar. Okay. So, so we have the goals of a technical analysis, the tenets of technical analysis. Let's move on to some potential benefits and risks because no approach to the markets is perfect. Okay. Potential benefits of technical analysis that can attract some is that some people find looking at charts with trends and support and resistance-in other words, price floors and price ceilings-relatively intuitive. They think it just kind of makes sense.
Well, if a stock is going up, shouldn't I be trading bullishly? And if a stock is moving between, uh, identifiable price levels, maybe out of trade under the assumption that those price, price levels will persist. Also, technical analysis is flexible and can be applied in any market condition. So bullish traders might be able to use their charts to plan bullish trades in the same way that bearish traders might be used, be able to use charts that they interpret to be bearish to plan bearish trades. Okay. Sideways charts can, can, uh, technically can potentially add a benefit. So technical analysis, very, very flexible, can be applied in any market condition. And finally, technical analysis is universal and can be applied to a range of financial markets.
And so I commonly get the question, 'Hey Cameron, we, we learned this technique on a stock chart, but can I use this to plan other types of trades? If I'm trying to add a diverse diversification to my, to my approach to the markets, I'm using other types of investments. Yep. Analysis of charts is generally, um, transferable from, you know, the concept of technical analysis on a stock chart might be concept. It might be conceptually applied to other types of charts or planning of other, other types of trades. So those are possible benefits. Now, what about the potential risks? It's all been fun up to this point. And I do want to make the point that just because we're talking about technical analysis, analysis in this series, I have mentioned that there can be other approaches.
Uh, we should never take this as a promotion of this approach. Of technical analysis in general for each trader, for each investor, they have to make that decision for themselves. But in any case, potential risks, well, humans have a cognitive bias, which can lead to poor decisions. Sometimes we just see what we want to see. It's, it can be quite common for a trader who has fallen in love with a company. It doesn't matter what the chart is doing. They can use, um, their, they can bring their bias to that chart and come to a conclusion. To a predetermined conclusion, looking for confirming, um, signals from that chart exclusively. So that's a possibility. Or they just might flat out be wrong about a chart. And, uh, so that brings us to our second point here.
Slippage is a risk that a securities price will move more than you've accounted for. It might move in the opposite direction. Trend application, meaning, uh, trends are often spotted in hindsight. The point of this bullet point being that, um, it's easy to become overconfident in looking at charts when it's explained to, to, uh, to us. We're learning a new technical technique. Let's say that we're identifying trends for the first time. And so we look at charts with the benefit of hindsight and say, oh, well there's an obvious uptrend. I would have spotted that piece of cake. There's an obvious downtown downtrend. I would have spotted it. No problem at all. And I would have spotted when it started to change. And we can be, there can be, um, some risk in becoming overconfident.
There. Okay. Yeah. Trends are often easy to spot in hindsight. And of course, technical analysis is open to subjectivity as it requires discretion to interpret. I think Ben can attest to this. I think that our veteran users of charts can attest to this concept. If you get two traders, let's say you sit me down next to someone else who has lots of experience with charts, bring up a chart in front of us. It's quite a common experience for me to have an entirely different opinion of that chart. Then this other hypothetical longer term or long-term, um, experienced trader of charts. Yep. Because we bring subjectivity to the equation, differences of opinion on, on the same chart can be, um, a common risk. Okay. So, um, let's talk about two possible approaches to charting.
There are some traders who prefer, prefer to lean on their own experience and apply their own discretion to a chart versus others who would prefer to automate things to the greatest extent possible to the fullest extent possible. So two primary approaches to this, uh, to the effort of analyzing a chart are discretionary and non-discretionary. So discretionary just relies heavily on a technician's reading of a chart and reading the price action. So they are bringing their own expertise to the equation. And they're looking at a chart, making their own decisions. Now that can carry, uh, an emotional burden when we're making those sorts of decisions, right? If we, if we make the call, that will, that falls entirely on us. This requires human interpretation and can incorporate additional information.
And of course, we could bring our own biases to the chart. As we've discussed before, this approach can be difficult for others to replicate. It can also be difficult for the trader themselves to replicate on a regular basis. So discretionary, there can be pros and cons to that approach. Some, some strongly prefer it. Let me use my experience that I'm bringing to the equation. Others though, would prefer to automate things again to the fullest extent possible. So they might use a non-discretionary approach or non-discretionary charting tools. This non-discretionary approach uses computer-generated signals that do not require human interpretation, such as, you know, there's a similar, uh, an example signal might be, you know, price moving above a specific technical threshold. It either, it has either moved above that threshold or it has not.
That's sort of a binary view of trading. So it's automatic. This is very methodical. It removes human bias, but it doesn't adjust for things that are fairly nuanced. It doesn't adjust for rare circumstances, but it does allow for an approach that other traders could at least conceptually easily replicate. You know, we could quickly, I could quickly teach someone. Oh, okay. So the signal that I'm looking for here is for price to rise above this technical indicator. And if price is above, that's bullish. If it's below, it's bearish. That's an on-off switch. But, um, there can be pros and cons to this approach. Okay. Automatic sounds that can sound, um, attractive, but it doesn't mean that it's always right. There's no guaranteed approach right now.
The ultimate objective of all of this, this hard work for a technical trader is that they're trying to learn how they might structure an approach to planning stock or stock trades or other types of trades. And they might do that using an investing plan. And we'll talk about investing plans in good detail in Lesson Eight, but we're working toward having a defined repeatable formula for trading. And included in a typical plan might be such things as watch list criteria or defining what to trade. What am I, what, what sorts of stocks is the trader interested in trading? They might look for when to buy and when to sell entry signals and exit signals. They might include in their plan, money management details, which is how many shares to buy once one has committed to buying some shares.
And then finally establishing routines for determining whether a plan, a given approach to trading stocks using charts is actually working. And then attempting to refine, that plan over time as, as data is gathered and experiences accrued. So the trader might establish some routines, setting monthly or quarterly goals to look back over trading performance and see if it can be improved. But there we go. So, that's just an overview of this field known as technical analysis. Let's go start to apply it on ThinkorSwap. Now I'm going to be using the ThinkorSwap desktop trading software. And I realize we have 114 people watching the live stream right now. I am sure that there's pretty confident because I've done this, this lesson series before, and I have had tens of thousands of people watch this in the past.
So, there are going to be a lot of people watching this that haven't ever used ThinkorSwap desktop before. So, the first thing I want to show is how to access this platform that I'm going to be using. Okay. So it's called ThinkorSwap . com. It's called ThinkorSwap. And it's trading software that is available for download free of charge from your Schwab online account. You can just pop into your Schwab online account, pop up here to the trade tab. And under trading platforms in the dropdown menu, we'll just click on thinkorswap desktop. And as we do that, there's just a, can't miss it, great big blue button, 'Learn how to enable thinkorswap.' You just click on that. It'll walk you through downloading this software.
Again, there's no charge for the software, but this software includes a whole slate of technical tools that we're going to be using. So if you're interested in following along with this, you may want to consider downloading that desktop software. But once it's downloaded, it's going to create a little icon on your computer's desktop. It's also going to place the Thinkorswap software in your computer start menu. But the icon just looks like a splash. It's called Thinkorswap. So it's like splash in the water. You get it. Anyway, that splash icon on your desktop, you just double-click that, and that's going to bring up a login screen that looks like this. You can see there's an example of that splash. That's what you're looking for. And it'll prompt you for a username and a password.
Don't panic. It's just your Schwab username and password. So as you log in though, I do want to point out that there are two versions of thinkorswap. There is a live trading version, which gives access to your screen, your Schwab accounts, and you can manage those accounts and make plans for trading on that platform. Or you have something called paper money. This is a mock-up version. It's a practice version of thinkorswap desktop. And you can still log into it using your Schwab username and password, but just make sure that you've toggled over to paper money. Okay. That's a great place to get some practice with new tools, new techniques for trading. Mike, you really appreciate this. Okay, good. That's always good to hear. Anyway, but let's go now to the paper, the Thinkorswap desktop platform.
You can see up here in my upper left, it says simulated trading. And I've just gone right to the charts tab within the platform. Okay. So let's get acquainted with this very quickly. First thing that we can do is just type in a symbol. How about we use Home Depot up here? Now I could, if I don't know the name, I could actually just start typing in, a name or if I don't know the symbol, you can just start typing in the name and it'll start to, to propose potential symbols, but I'm just getting the symbol there. There we go. So there's Home Depot. And let's make sure that everybody knows how to just set up a basic chart. By default, mine is a candlestick chart. That's going to a one year.
You can see back to October of last year, since we're approaching October of this year, it's a one-year daily chart. If you are trying to follow along at home and it's a different timeframe, you can change your timeframe right up here using this icon that says D for day. As you click on that, you can see a series of additional timeframes, weekly, hourly, minute by minute. Just make sure that we've chosen one year, one day. So it looks like mine. And also if yours is not showing a candle chart. So for example, if your chart style is not displaying candle, but instead is something like a line chart, you can just change the style here. Let's switch that. So you're learning some of the navigation of the platform already.
We'll switch that over to candle. Now, another thing that you'll commonly see me use here is I, I like to add a little extra margin here to the right of the last candle on the chart so that when I make drawings, when I, when there are upcoming events, we can see essentially out into the future, right? So I want some extra space off to the right of the chart. That can be accomplished down here in the lower right. There's a little double headed arrow. This, these are our right expansion settings like arrows pointing out expanding. I'm going to click on that little arrow icon and change our right expansion settings. And right now there are zero bars in the expansion area. Let's change that to 10, 10 bars to the right.
Let's click apply, click. Okay. And what you see here now is we have a little gap between the last candle and the right margin. So when we make a drawing, it'll go out. It'll go into the future. If there's an upcoming planned event, we'll see an icon for that event. Speaking of which, um, potentially a little final adjustment I want to make here to the charts that I want to demonstrate for everybody today is for some, they like to see such things as a dividends and earnings announcements, little icons on their charts that can be added right up here under our chart settings. If we go to the equities tab, we can go to show corporate actions. Okay. And, uh, and while we're here, let's also maybe add our volume to our chart.
Okay. Show volume, sub graph, show corporate actions. Corporate actions are just actions that a corporation might take that can affect their share value. Like a stock split affects the share value. Paying a dividend affects the share value. Having an earnings announcement can have, it can affect the share value. So let's click apply and click. Okay. And what we now see is here are volume bars down at the bottom, and we can see these icons. That indicate earnings and dividends and so on. All right. So now we have our charts all set up. They're looking familiar. They're looking like what your instructors will commonly be using. So let's start to, let's start to outline just to set the stage for the rest of our series, how a technician might go about looking at what, what is it they're looking at when they bring up a brand new chart, as they're trying to outline in their mind, a plan for trading that stock potential.
So I'm going to lean on the experience of those that have watched me in previous webcasts. It's a little exercise. You've seen me do this before, but let me throw out the question. What, what maybe is a first priority that you have when you first bring up a stock chart, what might be the very first thing you want to determine before you start making a plan for, for potentially trading that stock? What's priority number one. Now there's not a right or wrong answer here. However, it's definitely been my observation that in many cases, it's the same answer. So what is it? What, what might be the very first thing that a trader's looking for when they bring up a fresh stock chart they haven't seen in a while, or maybe they've never seen it before.
Well, the first thing they might be looking for is the trend. SJS photography, even put it in all caps, but yeah, SJS, CKC, George, trend, trend, trend, Kevin. Yeah. Yeah. So some traders might be looking for the trend of the stock. The concept here being whatever the current trend of the stock is, maybe they want to trade in that direction. If the, because once a trend is established for some technicians, the assumption is that trend is likely to persist. If a stock is going up, it's probably going up there for fundamental reasons. Like maybe it's a strong economy that's directly benefiting the stock. Maybe it's a well-run company and the shareholders are rewarding it. Maybe it's a, maybe the company has just discovered new advantages in its own little marketplace.
And so it's exploiting new competitive opportunities can be any number of things, maybe just generating tons of profit shareholders are enthusiastic about that. And they're, they're contributing to the advancement of the shares. And maybe that'll persist as long as those things continue. Obviously, if a sheet, if a CEO quits or a company starts losing money or making less money or not growing as rapidly as they thought, certainly a trend can change. But even here, there can be discretion. So we'll talk about in a future webcast, how the trend might be identified. But just to make the point here, look at this chart, tell me what is the current trend? Well, for some, they might look and say, well, if we just look back over the last 12 months, here's where we started 12 months ago.
And here's where we are right now. That's an upward trend that might be serviceable as a trend, as trend identification. And by the way, you'll notice I have this nice dashed blue line. Let me show you a couple tips about drawing on charts. We'll, we'll learn more as we go, but by default, I'm going to edit the properties of this to set it back to just the way a first time user of Thinkorswim might see. Their drawings. When we draw a line to draw a line anywhere, we just click once where we want to start the line and then click again, where we want to end the line. That's how easy it is to draw after we've selected the trend line tool from our drawing tools down here in the bottom.
So the one that I'm using is this sort of diagonal line. Okay. But when I draw a line, just click once to start, click once to end. Now I can edit the properties of that line. You'll notice that mine was this thick dashed blue line, not a thin solid black line. So if I want to change the properties of a line, I can right-click on any drawn line and choose Edit Properties from the popup menu. And then I can change the properties of that, that line. So let's change this one to blue. Let's change its style to dashed. Let's change the width from a thickness of one out of five to five out of five. And I'm also going to click save as default. So I don't have to do this every time I draw a line.
If it's, if I click save as default, that now becomes my, my default line properties. So if I click, okay, and now I draw another line, let's click one down here, click, click. There we go. Now I have a thick blue line that's created every time I draw. All right. But in any case, some traders would look at this same information on the chart and note some other things that might be important. Let's right click on one of these drawings and just clear all of them, clear the whole drawing. I'm going to leave it at that because it's getting a little cluttery, right? Yeah. A second trader might look at this and say, yeah, left to right, this is going up, but there have actually been some trends within trends within that trend.
So I'm going to switch my drawing tool here. Actually, let's just use this one. This one's fine, but they might notice that we have a trend that's been going up here. We have a trend that we have a trend reversal leading into a bearish trend. Through this period. And then we reversed again here on home Depot and started trending higher still, or trending higher again. There we go. So breaking down this trend further, but in any case, yeah, there can be discretion in identifying which way a trend is headed. So this first priority, maybe we need to work on this. So we're going to dedicate a session to getting, a little bit more detail about identifying trends. All right. So let's move on to number two. We brought up a brand new, fresh chart.
Our traders decided, okay, trend is my number one priority, but once we've identified a trend. So for example, let's say our trader thinks we're in a bullish or upward trend on Home Depot most recently. Well, even within that trend, if they're looking to optimize entries, if they're making a plan for trading that chart, well, they might notice this thing, isn't just going straight up instead. It's making sort of a stair step there. It's making a higher high, or it's making highs and lows in sort of a cyclical pattern. So, a second priority here is a trader might look for something known as support and resistance. What in the world does support and resistance mean? Well, support is a trading term that we use for a price floor.
Resistance is a trading term that we use for a price ceiling. It's no more sophisticated than that. So if a stock, you'll notice this has been pulling down, making cyclical lows, rallying up to cyclical peaks back down to lows. It looks like it's advancing along a ramp. We might refer to this as a support, a rising support level. It's as though prices are being supported from below. And when it really is just, it's just more buying than selling at those turning points. And up at the peak where we're hitting these cyclical highs, those are price ceilings. So we'd just call that a resistance. Or in other words, it would appear that there's something resisting further advances on the price. Really, it's just more selling than buying at that point. That's it.
So yeah, for some traders, they look first of all for the trend and then they look for refinements, that trend in the form of support. And resistance. And then they might move on to those other fancy tools that traders sometimes employ. Let's say we've identified a stock that's going up. So it has an uptrend. Maybe it's pulled back down to a price floor. So it's at support. Well, for some, they like to, this is where they might bring in automated view or a non-discretionary approach to the trading just to see if the timing seems to be getting a little bit more precise. And so let's add a technical indicator. And I'm going to, let me throw this in as our third priority. And again, this is not the only way everyone does it, right?
Plenty of flexibility in these approaches. Sometimes these technical indicators are referred to as studies. Okay. But for an example, let's go up to our edit studies icon. This is where we can find all sorts of indicators that could be applied to a chart. And there are hundreds of them. And how about we use for today's example, something called MACD? I'm going to use the MACD histogram. Just give a very brief introduction to it. It's a short-term momentum indicator, basically, but I'm going to choose add selected here and then apply it to our chart and click. Okay. And you'll notice what that gives us now is this series of green peaks and red valleys. And for some traders, without getting into how this MACD is built or really its, its impact, its implications for the trading, a common interpretation here might be: we look for a period where the stock is uptrending.
We look for a time when that stock is pulled back down to a price floor as we, you know, according to our own discretion. And then we look to our oscillator or our indicator and see if it's generating a bullish signal. For the MACD, a common bullish signal is for when the MACD dips down into bright red, and starts to turn to dark red. In other words, it hits a low and starts to rise again. That might be for some technicians, a confirmation that we're rising off those price floors. So for example, here was a signal. Here was a MACD signal. Here was a MACD signal on Home Depot. Okay. But for some, this is where they're starting, maybe do a blend of discretionary, um, a discretionary view of the chart and bringing in some now non-discretionary elements.
But then as a final stage, this is where a trader has really started to get fairly precise. A fourth step in making a technical plan for trading a stock might to be observed, might be to observe candle by candle price behavior. Now we're looking at a daily chart, so each one of these rectangles that we're seeing on our chart, they're called candles, and they represent one full day's worth of trading. And just a quick introduction to these as well. This is all just setting the stage for what the rest of our series is going to cover. But the one thing that we should know about candles is that on Thinkorswim, when we see a white candle, it's telling us that, that the closing price was higher than the opening price.
So maybe there's at least, intraday, a little bit of momentum there. A red candle means that the closing price was lower than the opening price. So during the day, net prices fell. So for some traders, they might look for, as an example, an upward trend, looking for price to be close to a support or a price low. Their indicator showing that momentum might be returning to the price. And finally, maybe they just look for something like a white candle, showing that even on an intraday basis, on a single day basis, the stock seems to be moving back in the direction of the identified trend. Right? So I think you can see why there might be appeal to a trader for going through this sort of a technical process.
And I think you can see some logic for why we might want to cover these in greater detail in future webcasts, which is exactly what we're going to do. Right? So for today, though, we've actually accomplished everything that we set out to do. I wanted to provide an introduction. And as a matter of fact, let's just go back and wrap it up. Today, we went through what technical analysis is and why some traders choose to employ it. We went through some basic principles of technical analysis, and we've provided that introduction to charts, and a very broad conceptual introduction to how a trader might start to plan a trade using charts. So still a lot to go through. Right? We have lessons two through eight. Those are going to be coming up in the future.
Obviously, if you're watching the archive after the fact, you might be able to skip right to lesson two right now. But before you do, let me make a couple of other recommendations. There are additional resources that Ben and I work hard to provide on a daily basis. Number one being: best place to connect with your favorite presenters is on X. Make sure that you're following your favorite presenters on X. You can find Ben there at Ben Watson CS. You can find me there at Cameron May CS. But this is where you can get observations about what might be happening with the markets. It's best place to find out what I'm doing on the weekend. What I did with my weekend. Anyway, just learn more from and about your favorite presenters.
But also make sure that you're following or that you've subscribed to our Trader Talks channel on YouTube. So the full name of the channel is Trader Talks Schwab Coaching Webcasts. And this is the very best place to find our previous webcasts organized into playlists, so that's organized things into, into series by topic. So if you're trying to learn about technical analysis, well, we have series dedicated to technical analysis. Also, you can join our live streams here. It doesn't cost anything to follow on X. It doesn't cost anything to subscribe on YouTube. So go down and click on that subscribe button right now. If you haven't done that already, it only takes a second time for me to let you go. So coming up next week, we have getting started with technical analysis.
Lesson two of eight. We're going to talk more about charts. Okay. For right now, if you need to go practice, if you're a first-time user of thinkorswim desktop, maybe go practice setting up your charts on thinkorswim. So you're ready to get going with Lesson Two. Okay. Speak truth. You appreciate the structured approach to training. Yep. I like that too. But everybody, thanks for being here today. I definitely want to express my appreciation to, how many people, 40 people have already clicked the like button out there in YouTube. Do me a favor. If you are a regular watcher of our, of our webcast, anytime you see a webcast that you like, make sure that you don't close it out without first clicking on that like button. It, it's a direct benefit to your presentation.
It makes things better. First of all, of course it's like applause. It's like, Hey, thanks for doing this. I appreciate it. But also, it gives that webcast a boost in the YouTube algorithm and allows that webcast to find a broader audience. We do these for no charge, so it can help us hopefully benefit more people. So that's always appreciated. But thanks everybody for giving me your time today. I'm gonna let you go enjoy the rest of our webcast through the rest of our, our day-to-day. I'll look for you in, in lesson two, on charts. I'll look for you in my other webcast series. I'll also look for you on X. Hey, thanks Ben, for helping out in the chats with; on behalf of Ben and me, I wanna say: whenever we see you again, until that moment arrives, I'll wish you the very best of luck. Happy trading. Bye-bye.
