Getting Started with Technical Analysis | Lesson 2

Hello, everyone, and welcome to Schwab Coaching. My name is Cameron May. I'm a senior manager and education coach here at Schwab. And this is Getting Started with Technical Analysis. And this is lesson two in a planned series of eight lessons that are intended to be sort of a beginner's guide to this world of technical analysis or charting. So, yeah, last time in our last video, we explored just the general concept of technical analysis. What is it and why do traders sometimes use it? But today we're going to be acquainting ourselves just with the tools for the technical trader, the charts. So we're going to be going through some basics of charts, setting out the types of charts and the role that volume plays, among other things.

And then we're going to explore three different types of chartists. So it should be a good discussion. Before we can get to that, though, let me first of all say hello to everybody that's already chatting in. Hi there, Carlene, and Truth Will Always Prevail, and Will, Ocean Life, David, Life in the Fast Line, everybody else. Thanks for joining us week after week. We really do appreciate your attendance, your contributions. We hope that you enjoyed lesson one. But I also want to say hello to anybody that might be here for the very first time. Welcome aboard! If you missed Lesson One, that's okay. You can watch the archive later. Stick with us here for Lesson Two; it'll be just fine to watch it without Lesson One.

And if you're watching on the YouTube archive after the fact, enjoy the presentation, but be aware that you're invited to join us in a live discussion. This one kicks off promptly at Eastern Time on Tuesday, so we'd love to have you here for the live stream if you'd like to be here. But let's get right into it. First thing that I would like to do is issue an invitation to you: If you're not following me on X, please do. It's a great resource to connect with me in between the live streams. You can find me on X at CameronMayCS. But we also need to bear in mind the risks associated with trading or investing. This is important information, so keep an eye on these disclosures.

The information here is for general informational purposes only and should not be considered an individualized recommendation or recommendation of any kind, 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. And investing involves risks, including the loss of principle. Okay, so let's have a look at our overview for our series. And as I do that, I also want to say I missed something here. We're joined in the chats by my very good friend, Barb Armstrong. She's going to be assisting the live stream attendees with any questions that they might have that I can't get to. Just during the flow of the presentation. Thanks for being there, Barb.

And also Barb would enjoy having you as a follower as well on X. You can find Barb there at barbarmstrongcs. All right. But with that said, here's our series. We started off with lesson one last time, which was that introduction to the concept of using charts for trading. Today, in lesson two, which are the tools, the charts themselves. And so we're just going to get into the basics of charts. And then we'll carry forward on the, in the series from there, trend identification, support and resistance, technical indicators, entry and exit signals, price patterns. We're going to wrap it up with building one's own custom investing plan. Okay. So here's the agenda for today. We're talking about charts. What are they and why might they be used?

We're going to talk about three different types of chart users, or at least three different approaches to using charts. And we might have one trader who does all three approaches. In any case, we're also going to break down different types of charts: lines, charts, and candle charts. We're going to talk about key points regarding those charts. And we're going to look at examples on the Thinkorswim desktop platform. Okay. So let's get right into it. Let's start first of all, with just chart basics. What is, what is, what is a chart? Well, a chart is a function of price and time. Price changes given time, given a movement. But price on a stock chart is charted on what we call the Y-axis or the vertical axis on our chart.

So you'll hear, see here in our example graphic, the chart Y-axis goes from a, from a price range of a high of 68 down to a low of around 61 or 60. Now time is charted across the bottom of the chart. So this hypothetical scenario is going from about July 25th through October 3rd. Now this is a line chart and it plots the closing price each day. And then it just connects the dots. So it just figures out, well, it tracks where the price closed on a given day, generates a dot, where did it close the next day, generates another dot, draws a line between those two. And these lines are often colored with either red or green to illustrate if price went up or down.

Now, the terminology that we use that we're now getting acquainted with is bearish for down, bullish if, if that movement is up. But that generates for us this line chart. And for some traders, they prefer a line chart. Now, I think you'll see more commonly used something known as a candlestick chart. And I'm going to show you both in just a moment, but there can be conceptual benefits to just using a line chart. For some, they think it's a, it's a quote unquote, a simpler or maybe a potentially clearer view of price activity. They don't really care about what happens, you know, what the day's open or the day's closed or the range in prices. These sorts of traders probably just more concerned about the general trend of prices represented by closing values over time.

Now, in addition to this on a typical stock chart, we'll see volume included down at the bottom and it's, and it's represented by a series of taller or shorter price bars, also known as histograms. And for some traders, they use volume as a confirmation of the strength of a, of a given move. So if a stock moves up on a lot of volume, that's sometimes interpreted to be as, to be a more significant move, even when compared to a similar size, that move, if there are lots of volume on the, on the move that might just be considered to have more strength, same deal. If it happens to go down a higher volume down move, even if it's similar in size to a previous down move, if it happens on, on heavier volume, sometimes it's assigned a conceptually stronger or greater degree of strength.

So let's go look at this. I think it's always nice to see the theory, we're going to consistently pair this up with application in a current market conditions. So let's, let's set up a line chart. So like I showed you last time, we're going to be using Thinkorica when the Thinkorica Swim desktop platform, this is software that can be downloaded from within your Schwab online account under the trade tab. But I've just gone to the charts tab here and we're seeing right now what's known as a candlestick chart. Okay. But what we've been discussing, is a line chart. So I'm going to come up here and change the style of chart. You'll see that it has a couple of candles there to indicate that's what we're looking at at the moment.

And I'm going to switch that from a candle chart to a line chart. And now this is looking much more like our graphic where you see a green line going up, red lines coming down, but really we're just connecting daily closes. We're looking at a daily chart. This is a one-year timeframe. In this example for today, we'll switch up the timeframe a little bit later in the session. But yeah, green going up, red coming down. But overall, a trader might look at this and this might be perfectly serviceable to tell that trader where there might be, well, what the current trend of the stock might be and where there might be significant price floors and price ceilings, otherwise known as support and resistance levels that we will talk about in an upcoming episode.

Okay. So we also want to know how we add volume. Now if you don't have volume on your chart at home, it can be added very quickly. It's one of the chart settings. So that's this gear icon up here at the top. I'm going to click on that gear and let's go to the equities tab because what we're seeing is the volume, equities, meaning stocks, basically the stock's volume. So let's check the box for show volume, subgraph and apply that to our chart and click okay. And what we're seeing now is are these bars and these, or otherwise known as a histogram down at the bottom and yes, you can make this a little bit bigger if preferred.

You can click on the margin, the intersection, well, the little space right in between the price chart and the volume, you can expand that volume up if preferred or push it back on down. Okay. So those are the basic types of charts. Well, that's a basic line chart and we've seen a candlestick chart, but we need to talk about what candlesticks are in order to understand those. So, let's get a closer view of candles and really they, they begin conceptually with something known as a price bar. Now this is another type of chart known as a bar chart. We have line, we have bar and we have candle, but a price bar actually probably predates candlesticks, but it basically is a series of three lines.

We have a vertical line and then we have two horizontal lines, one sticking out to the left, one, one sticking out to the right, but a price bars are either bullish or bearish; a bullish bar, which means a bar where the price was generally up, is where price closed higher than an open. So we do need to talk about the general construction of these lines. So the first thing is at least the way that I think about it is the vertical height of the price bar. What this is showing us is for whatever timeframe frame we've selected on our chart, a daily chart we're looking at one day, if we're on a weekly chart, we're looking at one week.

If we're on an hourly chart, we're looking at an hour, but let's just stick with one day, but it's showing us the highest price and the lowest price for that timeframe for the, in this, uh, in the size or the length of the vertical bar. So the top of the bar is the highest price. Bottom of the bar is the lowest price. And then the little tick out to the left is our opening price for our selected timeframe, the opening for the day in our example, and then the tick sticking out to the right is the closing price. So it's basically telling us four points of information, but really what it allows the trader to do is reconstruct for themselves at a glance what has happened for their selected timeframe.

So it might tell us in the case of a day, the story of trading for that day. So in this example for our bullish bar, we might be able to quickly glance and say, okay, so we opened down here, sold off a little bit down to a low. So at one point trading was a little bit lower, but recovered all the way up to a high up here and then closed the trading for that timeframe right up close to that high. And you can see why a trader might consider this to be a bullish bar. We closed above the open. And in this case, it's quite bullish because we closed right near this, the, uh, that period's highs. Okay. Let's compare that to our bearish bar. Let's compare that to our bearish bar.

Let's talk ourselves through the story of this bar here. We have the price closing lower than it opened. So in this case, we might say, let's, let's say this is the day. All right. The day's trading opened up up here, had a little bit of a rally, but through the rest of the session or through much of the session sag down to a low and then close just a little bit off those lows. Yeah. More of a bearish story for that bar. Okay. Now, a little bit more to learn about chart about these bar charts is that the bars now we now know they tell us a few things and bars basically show us three items, three lines. It shows us the open is the left tick.

The closes the right tick and the range is that vertical bar that high to low prices. We might call that the range for the day or the range for the hour. But the color on a bar chart illustrates how the bar performed from one close to another close. Or in other words, it's comparing the right tick to the right tick. So we're looking at the little sticks poking out to the right. And if from one from one bar to the next, we go lower from right to right. That would be that would give us a red candle or a red chart bar. If we have a right tick to right tick going up, then we have a green bar. In other words, our closing values are going higher.

So a green bar means it closed higher than the close of the prior bar. Red bar means it closed lower than the close of the prior bar. So there it is in an illustration. Let's go look at it in real life. So that means that we need to, we need to switch up our type of chart. Let me see. Krishna says, Krishna says, how do we how do we use old things? Great. So Christian, I'm not going to be getting into scripts at all in this webcast series. It might take us a little bit too far off, off track. But you might want to check out one of our scripting-oriented webcasts. So you can check for that on the calendar. Okay.

But let's go to the thinkorswim desktop again, and I'm going to switch the style here from our line chart to our bar chart. All right. So here we get those series of bars. And how about we just zoom in? One of the features on the thinkorswim charting software is that we can just go to any period of time. Let's say we wanted to get, we wanted to get a closer view of just the last few weeks. Of trading. What we can do is just click and drag over that period. That's going to give us a closer view of these bars. And we can start to reconstruct. How about we look at let's look at yesterday's trading. Okay. If we didn't pay any attention to Walmart yesterday, we could quickly reconstruct how trading generally went just by looking at this bar.

Oh, it looks like we open trading here. Where was that relative to the previous open? It was up. So, um, yep. Up from the, up from a close to open. So open here only sold off a little bit from that open rallied through the session and closed, uh, up near those session highs. So what, what does that tell us? Maybe about the general intraday sentiment of Walmart yesterday, pretty good day for Walmart. And if we compare the close to the previous close, we had a higher close. Okay. And therefore yesterday's, uh, bar is a green bar. We can see just the opposite back here on the 26th. Okay. You can see we opened here only a minor rally after that open sold off and closed closer to the bottom than to the top.

But, uh, yeah, not a great story for that day. And this close significantly below the previous close. We have a red candle there, but red, uh, a red bar. Okay. Let's see. Thank you for helping people. I really appreciate that. Some of you are, are helping out with other people's questions in the chats. Definitely appreciated. Thank you. And thank you, Barb, for also helping out. Oh, and as I look over the chats, quick heads up, there is a survey in the chat for the live stream attendees right now. So I'll hit the pause button on my presentation for just a moment, just to, just to make a quick plea here. If you're here in the live session, go ahead and click that survey link.

Right now, that'll bring up that survey and you can fill it out after we're done with the presentation, but I just want to make a promise to you. First of all, number one, that's not a very big survey. Okay. It's two, two multiple choice questions in the comments box and a suggestion box. But if you fill out that survey, if you take that time to do that, I'll take the time to read it. It definitely goes right to who you would, you would hope it goes to. And, uh, it definitely helps me out. Okay. I read through the data. I read through the comments. I was just reading through, um, survey information. This. This morning. So definitely appreciate it. Okay.

But back to the presentation, I think what we can see here with our bar chart, you can see why some traders like their bars. They can see, uh, am I getting more greens than reds? Um, are they, are the closes higher than the opens? And, and if we want to get a degree of volatility for the stock, we can see, you know, maybe an average size of the trading range, lots of potential information that can be gathered just from that, but other traders actually prefer something known as a Candlestick chart, probably the most commonly used chart type, at least in my experience. So let's compare price bars to candlesticks and really candlesticks have their, they have their foundation in price bars. It really is just in my view, kind of a, just a variation of a price bar.

All that a candlestick does is it takes the, the, uh, opening tick and the closing tick on that bar and draws a little box around it. Okay. So for example, if you look at this red candle over here and look at this red, uh, bar over here to the left, you can see they're the same, right? We've just drawn, drawn a box around from the open to the close. Now that's created for us a red candle. The other one though, is a green candle with an empty body. That's also drawn a box, but in this case, the color is the clue regarding where the open and the close were. The, the, the problem with drawing boxes around the open and the close is that you lose. Okay.

Which one was sticking out the left and which one is sticking out the right. They're both sticking out both directions now. So the color becomes vital here to tell us the story of what's been happening. So let's go to a basic candle construction. When we have a bullish candle, the price closed higher than it opened. Okay. So the candle, the vertical height of the candle still stretches from the highest price for the day. If you're using a daily chart. Down to the lowest price for the day. If you're using a daily chart, the highs and lows change for hours and weeks, but in any case, but the open and the close, um, when we get, uh, a bullish candle represented by an empty candle body, that's, that tells us that the opening price was the one at the bottom and the closing price was the one at the top.

So if I glance at a candle and I see, oh, okay, it's an empty-bodied candle with a green outline. That tells me lowest price was here. Highest price was here. Open was down at the bottom. Close was up here at the top of the body, a bearish candle, similar, but opposite to the, uh, bullish candle in a bull in a bearish candle, the price closed lower than it opened high and low, same, right? But if we see a solid candle body and a red solid candle body, that tells us that price opened up here and fell down there. So I can tell myself the story here. Okay. So we opened up high, rallied a bit, sold off down to the low and closed pretty close to the low.

That's what I can infer from that solid or filled candle body. So just to recap some of these candle chart basics, a candle chart shows three items. Again, the open, which is determined by the color, the close, which is also determined by the color and the range. Okay. So, uh, the, but the color illustrates how the candle performed from its open. A green candle means that we closed higher than it opened. A red candle means it closed lower than it opened and candles can be filled in. They can all be filled in like this. I think more commonly you'll see the green ones are not filled in, but it's possible. It doesn't change the meaning, but in that case, we can just lean on the color green, but I can glance at a, at a candle like this one right here.

We can see, okay, so it's a solid green candle. That means that the open was down here at the bottom of the body. Close was up here at the top of the body. And then the vertical height is just the high to the low. That's the range of trading for the day, just the opposite for a red candle. So let's go look at that on our example chart again. So I'm just going to stick with Walmart, but let's switch our style here. Okay. Truth says, how is the, how is the width of the candle body? How's that drawn? They're just standardized. The, the candle body just, it's always just extends to the, the width of the, um, of the original bar chart. Yeah, that's all. Now there are different types of candles.

I'm not going to get into it at all, but like an Equa volume candle, which is getting a little bit too deep in the weeds for this discussion can, it can change its width. You'll see those be a little bit, uh, different width, but for a standard candlestick, they're all the same width. Okay. So let's change our style here. And what I want you to do is keep, maybe keep your eye on these last few candles and try to envision before we do this, what these should look like, because I'll tell you what, what I think they're going to look like. We have an open here, close there. That's going to be a red candle. We have an open here, a close there. That's going to be a green candle.

We have an open here, a close there. That's going to be a green candle. These last two are going to be empty bodied candles. This one. This one's going to be solid. That one's going to be solid. Let's let me show you, let me go up to our style. Let's go to the bar, change our candle. There we go. Yep. There's our red candle that tells me high and low. It tells me that we opened up here at the top of the body, closed down at the bottom. Here's a green candle, high and low. We opened down here at the bottom of the body, closed up here at the top. Now don't get confused. Let's zoom out at just a little bit because they're going to be examples.

How about if I zoom back here? Okay. Here's a nice big move up. Why is this a red candle if it's clearly above the previous day? That's because candles don't look at the previous day. All they do is pay attention to open versus close. Okay. To the same extent, if we were to, let me zoom back out and quickly way that you can zoom out is just use these little magnifying glasses down in the little, down the lower right-hand corner. But if I were to go back, let's say, oh, right here, here's another one. Here we have a move up, but a red candle because yeah, we closed higher than the previous day. But what's important with candle construction is where is the close relative to that same day's open.

That's a red candle. And we can just start to reconstruct the story of those days again. So if I were to look at Walmart, I could look at today. Now trading is still going on. So you're going to still see this change. Okay. It's changing a little bit, but I can see. All right. So today we opened up down here. We sagged a little bit during trading, but we've really rallied up and now we're trading up near, near that high. And if you keep an eye on that, as the markets are open, you'll see that move a little bit. If I were to move, if I were to position my cursor here, you might see it move off of that horizontal line on their neck, on the next tick on Walmart's trading.

All right. But that is, that's how handles are constructed. And that's a quick rundown of line charts, bar charts, candle charts. Which one is, are you going to choose if you're, if you're using them in your own trading, their pros and cons to each. And it really just comes down to the trader's preference. Now let's look at some other basics just found within the, the chart tool itself. Okay. First, we should know that there's some key information that's listed right at the top of the chart. When we hover over any given. Any given bar or candle, it's going to tell us this information right up here at the top. Okay. It's going to give us the stock symbol, the timeframe, the exchange from which the, the quote is coming and the date.

So we're seeing all of that right up here. Okay. So we, our symbol will be just to the left here. Then we have our, our timeframe. Where the quote is coming from and the date. So in our example graphic here, this was February 1st of 2023. Okay. And then as we hover over one of these price bars or candles, it'll also tell us more information about that day or that hour or that week. So we have some letters here representing different words. O for open, H for high, L for low, C for close, R for, R for the range of the day. That's one thing, you know, people might look up here and they say, what is this? What is this R? And what is that Y? Yeah.

In this case for this candle on February 1st, we're seeing the open was at $84. 16. High was $85. 90. Low was $83. 61. Close was $85. 21. And the range from high to low, that's our range. Or in other words, it's the height of the candle or the bar, $2. 29. And then what is the Y? Well, the Y is just wherever we position our cursor on our chart, there's a value over here. That's just showing us where the tip of that cursor is. So it just allows us to point at the chart somewhere and it tells us what that value is. So let's go look at that on Walmart. I'm going to zoom back out here just so we get that more traditional view of the chart.

And as I move around, you're going to see, I have two crosshairs. I have a vertical line, a horizontal line right at the tip of my cursor. If you're not seeing that, you can switch that up right down here. See how I've selected crosshairs. If I have something else, like let's say just horizontal, that's just going to give me a horizontal line. So let's switch that to the crosshairs. That tells us date and it also tells us price. It gives us an intersection of those two things. But let me just move along through the dates here and I'm just going to stop at random. Now look up in the upper left corner. Look up here and here are those values that we're talking about.

So I'm just going to go back there and point at some random area. I can see, okay, symbol is Walmart. I can see this is a one year. One day chart. It's a nicey quote. The date, June 21st of 2024. And now I can see all the elements of June 21st. The opening price was $68. 26. The high was $68. 55. The low of $67. 83. Close of $67. 91. The range from high to low, 72 cents. And then we have that Y value again. Once again, that Y value is as I move up and down my chart, notice that if I'm going to move over here. You'll see a number that's following my cursor. Yeah, that's just showing me where I've positioned by a cursor.

So I happen to land right there at $76.22. That can be very helpful for technicians in determining price floors and price ceilings. And where was the stock at this point, they can just point at it, right? So. Now let's talk about now. Now that we know the basics. Now that we know the basics, types of charts and how the candles and bars and lines are constructed. There are a few different approaches, general approaches to how charts might be used. Okay. So basically we have investors who might use charts. We have traders who might use charts and we have scalpers who might use charts and all three of these, they might actually be the same individual. There are some traders who say, okay, well, when I'm trading this portion of my portfolio, it's primarily for investing.

This one, I'm doing some trading, this one, some scalping or some shorter-term trades. But understanding those timeframes is important. But typically an investor, when we use that term, we're typically talking about somebody who's in it for the longer haul. They don't really care what's happening minute by minute or hour by hour, or maybe even day by day. Instead, they might be looking at a weekly chart and trying to figure out what's going on. And they might be looking at a weekly chart, trying to get the context of what's happening over the course of years. Are we at all-time highs? Are we approaching weekly price ceilings? They might just be looking at that longer-term view and making longer-term investing decisions. Now, our traders are typically using something like a daily chart and they're just looking at a period of maybe weeks to months.

These are those sorts of position traders. They're not just looking at a weekly chart. They're looking at a period of maybe weeks to months. These are those sorts of position traders. They're not just who are looking at maybe getting in and out over the course of a week, maybe a course of several weeks, maybe a couple of months. But yeah, that sort of a timeframe, and they'll give the greatest emphasis to that daily chart. Now, interestingly enough, the techniques applied on the weekly chart or the daily chart, or even our hourly chart might be very much the same, just using a different timeframe. So our trader, commonly using daily charts, might be using a different timeframe. Our scalper, who's really just looking to get in, and their position might only last just a few days.

Those traders are very commonly looking at the hourly charts, just looking over the last several days. So yeah, SJS Photography says maybe the five-minute, the one-minute, the 10-second charts, maybe. Yeah, just depends on that scalper's preferred timeframe. But let's go look at this on SmartExample. Now, by default, I've been using just daily chart. Which of our three approaches would this most commonly be used by? Probably our trader, right? They're looking at maybe the last several months, trying to determine things like which direction is the stock heading? Are there any price ceilings overhead if I'm considering entry? Should I be buying maybe down near price floors? Those sorts of concepts that we need to be looking at. And then we're going to look at those.

So that's what we need to examine in greater detail in a future webcast in this series. We're definitely going to do that, that's going to be coming up, I think, in week four, in video four. So someone asks, how do you get those shorter-term charts? I'll show you that. But let's talk, first of all, about what our investor might do. An investor, typically, they might not even care what's happening on this daily chart. Our trader might be looking at this right now and they're saying, okay, looks like we're going left to right upward. Ooh, maybe recently we were pushing the price ceiling right here. Or maybe they're a little concerned that we might be right at that ceiling. Maybe. Okay. But let's look at this through that weekly lens.

I'm going to click on my D. The D up here just stands for day. And that allows us to choose different timeframes. Now, that's going to change if I switch this to a weekly chart, you'll notice it now says WK for week. If I were to switch this to an hourly chart, now it says 1H. But let's go back to that weekly chart. And here, our investor might be saying, hey trader, I don't care what's going on, on that one debut. But on a weekly chart, boy, this looks like it might just be rolling through a stair stepping pattern. Stepping higher, pulling back, stepping higher, pulling back. They might look at this and say, we've been going up. Maybe we've gone up a little bit too far.

And our weekly investor might think, I'm going to wait for this to come down for a few weeks like it's done in the past, before looking for any further investment. At this point, I hand's up the chart, and it's like, entry. Is everyone of them going to look at it that way? No. There can definitely be differences in the way these concepts are applied to charts, but just know that there are, generally speaking, these three different kinds of approaches. Now, finally, we have our scalper, someone who's looking quite short-term. They might still be cognizant. They might still be aware of what's happening on the weekly and the daily charts, but they might give their greatest emphasis to, let's say, an hourly chart.

Now, as I switch this to the hourly chart, why do I say, why would our very short-term trader really be concerned about what's going on in a weekly or a daily chart? Well, their greatest emphasis might be here, but I'll bet that there are some in our audience today who could relate to this. Have you ever taken a position looking at a shorter-term chart, and we forget to check the longer-term, and we accidentally buy in just when we've hit, let's say, a resistance level that wasn't obvious on that shorter-term chart? In other words, a price ceiling that wasn't obvious on that shorter-term chart. Yeah. So regardless of timeframe, there may still be a glance at the other two. All right? But yeah, here's our hourly chart.

And as we look at this, I got to say, boy, this just looks different, right? Doesn't look like a normal chart. Yeah, the candles look basically the same, and actually their construction is the same, except it's using hours instead of days or weeks. But what is this gray area? And what is this white area? Well, what we're seeing now is-This is a 24-hour clock, basically, on our chart. This chart is including the after-hours and the pre-market trading. That's what we're seeing in these gray areas. So you'll notice right now, the markets are open. As of this moment, it's 2:34 Eastern time. So the markets don't close for another hour and a half. So we're in a white part of the background field here.

But after-hours trading, we slide into this gray, and what we'll typically see is-Not as much trading. It's going to be more common to see gaps and things like that. But yeah, if we're switching the hourly chart, be prepared, or the shorter-term intraday charts, be prepared that there's going to be the sort of striped effect to the chart, right? And what might our scalper trader be looking at at this moment? Yeah, boy, looking at it through this lens, you can see it looks like we might be right up near previous peaks, right up near very near-term price ceilings. And our trader might decide, I don't care what it says on the weekly. I don't care what it says on the daily right now. Maybe it's time to hold off on an entry.

They're worried that they might bump their heads. That could be one way that they interpret this. The bottom line point being, there can be a different primary timeframe for different primary types of trades. All right. So let's switch this back. Let's go back to our one-year chart. And by the way, if you want to set up some custom timeframes, there are some defaults or some favorites here, but we can set up custom timeframes using this timeframe button. Intraday timeframes can be set up here. We can go for daily timeframes here, or just flat-out custom right there. So play around with that as time permits on your own. But let's switch this back to a one-year daily chart. And finally, we need to talk about the role of volume.

We've been ignoring these bars down here at the bottom. So let's talk about the importance of volume. Volume can conceptually help illustrate the strength of a move, either up or down. Volume does not indicate all by itself. If I were to look at this down here without a price chart giving me some more information, volume doesn't indicate the direction of what's happening with price, but rather potentially the strength of a move. The strength of whatever directional move it's making. So if we see a flat day where price doesn't change very much, but there's a lot of volume, that can be an indication, as sort of useless as this sounds, an indication of indecisiveness. And it can be a lot of indecisiveness.

One way to look at a high-volume day, so if we see a big spike up on volume like this, but price isn't going anywhere from close to close, for some traders that can still be trading, it's important because what it might signal is that there's an intense tug-of-war going on. There's lots of buying, there's lots of selling, but nobody's getting the upper hand. So the price isn't really moving anywhere, but it might still signal that something is about to happen. So it might just put that trader on a higher level of alert to wait and see who wins that tug-of-war, and maybe they take a trade in that new direction. Now, if we have an up day with high volume, that's generally considered a stronger bullish indication than an up day with low volume.

So if you can imagine, let's say that we have two days. On day number one, price goes up a dollar on a million shares traded. Day number two, price goes up a second dollar on five million shares traded. Even though price was equally large moves, the traders might see that second day as a more significant development because more buyers have gained that upper hand, okay? Sponta22 says, can you show again how you added the volume again? Yeah. You didn't see how I did that. Yeah, I can definitely do that. And also, it's a good reminder, the vast majority of our webcasts are also recorded and then posted to our YouTube channel. So you can go back, if you missed something, you'll catch it again. Okay?

Not every single webcast is recorded and posted, but vast majority of them are. But in any case, a down day with high volumes, generally considered a strong bullish indication. So that's a good reminder. Stronger bearish indication than one with low volume. So let's go look at that on our Walmart chart. So if we don't have volume in that, it's one of our chart settings. It's this gear up here. You'll notice as I hover over that, it says your chart settings. Do you want volume as a default setting or not? So we're going to click on that and we're going to go to equities because it's stock volume or equities volume. And we're going to check the box for show volume subgraph. If that's unchecked, no volume. If it's checked, let's click apply.

There's our volume. And so our trader might look at events like this and say, well, hey, here's a big up day, and look at that volume. Strong volume on an up day may signal that price has more upside potential. Strong volume on a down day might signal that price has more downside potential. Does it always pan out? Let's see if we can find an example. Okay. So this one, was that an up? Yeah, that was still an up day. Yeah. Most recently, there's a spike in volume right here on this white candle day. So we closed above the open and it was accompanied by strong volume. And that might signal more upside potential than say, look at this, here's a white candle of similar size. Let me zoom in here.

So here we have kind of a big-ish white candle, low volume. That might be a signal to some, maybe that buying enthusiasm may have those levels. So let's try that again and let's see if that's enough. Is sort of petering out. Here we have a similarly sized white candle, right? But more volume, maybe that's signaling that there's more potential for upside. Doesn't always work out, in this case, it seems to be fairly consistent, at least on Walmart. So how much volume is lots of volume? Well, that is a concept that can certainly vary from one trader to the next, but let's say for some, they might say at least 50% above average volume, or at least that it is appreciably or noticeably above a normal volume height on our volume bar.

Now, not every trader even looks to volume for confirmation. Nope, but that is one of the other tools that's available if one chooses to use it here on Thinkorswap. All right, so there's your introduction to just the basics of charts. So we're all set up, we know three different types of charts, three different types of chart traders. We understand now the role of volume. So that's gonna do us for lesson two. I've accomplished what I set out to do today as a quick recap. We wanted to discuss the what's and whys of charts. We discussed line, bar, and candle charts. We identified some key data within the charts, and we looked at examples on the Thinkorswap desktop, but I do have some suggestions for you.

For what you can do between your viewings of these lessons, make sure, first of all, that you are following Barb and me on X. You can find Barb at barbarmstrong. cs. You can find me at cameronmay. cs. It's the best place to connect with your favorite presenters. You can also see, you know, like what I did over the weekend. Yeah, I went up, checked out the salmon run here in Utah. The other thing that I would suggest you do is make sure that you're subscribed to our Trader Talks channel on YouTube. The full name of that channel is Trader Talks, Schwab Coaching Webcasts. It doesn't cost anything to follow us on X. It doesn't cost anything to subscribe to our Trader Talks channel on YouTube, but Trader Talks here is the very best place to find those previous webcasts.

You know, so if you missed how did I add that volume? How do I learn, you know, go through the rest of these lessons? You can go to our playlists here. And since we're talking about technical analysis, let me scroll on down. Right down here toward the bottom is our Getting Started with Technical Analysis series. And we can see the whole playlist right there. So if I wanted to go back to lesson one, there it is. Okay. But yeah, subscribe, follow. Also, I do appreciate everybody that has clicked the like button. I can see, you know, we've got about 100, 115 people watching right now. 31 people have clicked the like button. That sounds like applause to your presenters. It definitely is a display of appreciation, but it also helps our webcasts in the YouTube audience.

If you would make a habit of always clicking the like button, if you liked the webcast, that'd be fabulous. Okay. Let's see, there was one other thing I wanted to cover. Oh yeah. One other thing that can help you boost your understanding of technical analysis, and I think it's a great supplement to this webcast series, can be found right here on Thinkorswim, under the education tab. Just go to the education sub tab. So you'll notice there are two tabs here under the education. You have education, you have learning center. Learning center is learning about Thinkorswim. Education is learning about trading concepts. Okay. And included in that education, if we scroll down a bit, is gonna be our, oh, wait a second. Let's go to where I intended to be.

Up at the top, let's go to stocks first. Talk about using charts to trade stocks. Now, if you scroll down, there are some courses, including a stock trading with technical analysis course. So a written course, rather than a series of videos. Okay. So everybody, thanks for joining me today. Thanks for filling out the survey. I know that Barb has reposted that survey. Appreciate that. I will definitely read through that data and read your comments. We'll move on to lessons. Lesson three next time, which is gonna be trend identification. That's lesson three of eight. But between now and then, you can practice setting up your charts in Thinkorswim, navigate around, learn to train your eye to look for the day-by-day, hour-by-hour information that's provided up there next to the symbol box. But I'm looking forward to lesson three. I hope to see you there. I appreciate you giving me your time today. I'll look for you in a future webcast, if not lesson three, I'll also look for you in X, but whenever I see you again, until that moment arrives, I wanna wish you the very best of luck. Happy trading. Bye-bye.