Have you ever stopped to think about just how many stocks are being traded on the public markets at any given moment? If you just consider the stock market indexes that are in America alone, you're already looking at tens of thousands. Both NASDAQ and S&P 500 are massive, representing huge chunks of the market, and they are just a couple of options. To the new trader, it can seem over whelming to think that you have to navigate your way through all these stocks on a daily basis, with no idea about how the numbers you're seeing really relate to the health of your investment. That's why it's so important for all investors to have a firm knowledge of how to chart stock.

The first thing you should know as you set out to learn how to chart stock is that it's alright if you aren't a financial or mathematical genius. There's actually nothing about the principles of chart interpretation or technical analysis that a regular person can't understand. Transforming this knowledge into information that can help you make smart decisions as a trader is a little more difficult, but with all the tools that are available to assist you, still possible for a regular person.

The first thing that you need in order to be able to chart stock is a firm understanding of the basic assumptions upon which technical analysis is built. Technical analysis is the practice of tracking and evaluating price changes in the market in order to make more accurate predictions about which direction a certain stock will head in the future, whether up or down. Knowing what a stock is likely to do before it actually happens is a great asset to traders who are interested in staying away from stocks on the downtrend.

The next things that you have to become familiar with are the tools that technical analysts use to chart stock. Thankfully, it is no longer necessary to record and chart these price movements by hand. Instead, there are a number of highly sophisticated stock tracking tools available online that will immediately record and chart the price points for the day as they emerge. Some of these tools even display information in real time, meaning that you can watch the fluctuations that occur throughout the course of the trading day. Over time, these charts are analyzed for patterns and trends that contain clues for the future.