Main Page

Detailed Information

StockChartNet Indicators

When you look at a chart of a stock, in hindsight it is obvious when you should have bought and when you should have sold. However, many people continue to hold on to their stocks, forever hoping that the price will head back up to where it was before!
It is difficult to predict when to buy and sell, and it takes a lot of time looking at charts and reading company announcements before you make your decisions. This is too time consuming and the reason why most people just hold on to their stocks, and later find that their gains are lost as the market turns down.

What StockChartNet tries to achieve is to manage the entry and exit points of your stocks for you. In between these entry and exit points, you don't need to analyse the charts for each stock. StockChartNet automatically indicates these situations in your portfolio listing.



• How does this work?

  StockChartNet has spent several years fine-tuning a set of Buy and Sell indicators. You can see these indicators at the bottom of the chart below.
  The green boxes indicate buy conditions (when you should be holding the stock) and the red boxes indicate sell conditions (when you should be avoiding the stock).
  When there is no clear buy or sell indication, light blue boxes indicate a Watch period, when neither buy or sell is recommended (usually just before a buy/hold period), and orange boxes indicate a Caution period when the buy and sell indicators conflict (usually just before a sell/avoid period).
  
  
  The triangles are alerts for special conditions. Light green triangles indicate an oversold position (possible buy entry point), and likewise a light pink triangle indicate an overbought position (possible sell exit point). A dark green triangle is a stronger alert indicating a buy entry point.
  
  These indicators are based on the pattern of price movements only, no fundamental analysis is performed and no other factors are taken into account.
  
  

• Why are we confident that this 'price basis' is a good strategy?

  Put simply, it is the difference between entry and exit prices that determines your profit!
  Sellers are investors who believe that the current price is at a premium compared with future company worth. Buyers are those who believe that the present market price is at a discount to future company worth. An imbalance of these opinions causes prices to move in one direction or the other. The point of change in the balance of these investor opinions reverses the direction of the trend in prices.
  The reasons behind the opinions of investors may subsequently prove to be incorrect but whilst opinions drive prices, StockChartNet uses prices as the basis of its investment strategy .... to take advantage of the "market's opinion".
  
  

• What is the "market's opinion"?

  Estimates or beliefs of future earnings per share (eps), future dividends per share (dps), knowledge about competitive advantage or the quality of staff are some of the factors which affect investors' beliefs about a company. Collectively these beliefs (be they correct or not) are called the "market's opinion". It is this opinion which influences the trend or changes in market prices.
  
  

• What are other influences on market opinion (and hence market prices)?

  Analysts are always estimating and forecasting up and coming quarterly, half yearly and annual company results. Their forecasts affect the opinions of other investors. Thus, the market may experience changes in price trends long before an official announcement is published. StockChartNet takes advantage prior to the official announcement through its price based strategy.
  
  

• Do price trends always change prior to announcements?

  No, not always. Sometimes an impending announcement is not made public.
  The following chart shows what happed to AMP's share price when the company requested a surprise suspension in trading for two days on May 1, 2003. The announcement was made revising company profits downwards. When trading recommenced the share price fell heavily. Neither the analysts or the general market were aware of this impending announcement so there was no prior change in market opinion to affect any change in the price trend. So, without that prior knowledge affecting market opinion to affect prices, StockChartNet had no grounds to generate a sell signal.
  Fortunately this situation does not occur often.
  
  
  
  StockChartNet's buy and sell indicators look at the subtle changes in price (and other derived indicators) to determine the indicator boxes shown at the bottom of the chart.
  
  It is the market's opinion that causes these subtle changes in price, and StockChartNet's indicators take advantage of that to predict good buy and sell periods.
  This is the meaning of our slogan: " ... taking advantage of market opinion".
  
  
  

Portfolio Management

• So will I still have to look at each chart for each stock to see what to do?

  Only when you need to!
  StockChartNet takes the last five (trading) days, and builds a matrix showing the buy and sell indicators for those five days. You can see this matrix at the lower right of the chart. The last five days are expanded into a separate box, with the most recent on the right.
  
  
  Here we can see that the most current indicator is Sell (red),
  before that was three days of Caution (orange),
  and before that one day of Buy (green).
  
  When you look at the listing of your stocks in StockChartNet, this indicator box is presented against each stock. Any recent alerts are also shown.
  
  
  This allows you to see at a glance what to do with your stocks. In fact, StockChartNet has some rules based on the indicator patterns, and can sort your portfolio for you into different categories.
  
  
  Now you can really see at a glance what to do with each of your stocks!
  
  

• How do I keep track of which stocks I own?

  Your portfolios are split into two sections in StockChartNet: Those stocks you currently own ("Current Holdings"), and those you are monitoring ("Watch List").
  The Current Holdings also shows statistics on how your purchases are going (the light blue numbers on the right)
  
  
  Initially, the stocks you are interested in will be in the Watch List.
  When they move into the Buy section of the Watch List, this indicates that StockChartNet recommends that you purchase them. If you decide to purchase the stocks, recording the purchase moves the stocks from the Watch List to your Current Holdings. When you decide to sell your stocks, recording the sale moves the stocks back to the Watch List.
  As you buy and sell your stocks over time, the stocks will move back and forth between the two lists accordingly. Therefore, your portfolio will consist of a set number of stocks, but you will only be holding some of them at one time.
  In this way you can manage a large portfolio of stocks without having to examine all of the stocks all the time.
  
  

• How do I choose the stocks in the first place? Can I change my selection?

  You can add and remove stocks from your portoflio whenever you wish, and you can have as many portfolios as you wish.
  When you hear about a stock in the news, or from a friend, you add it to your watch list. Don't buy it just on your friend's recommendation! Keep it in the watch list until it falls into the "Buy" section: this is when StockChartNet thinks it is the best time to buy that stock.
  For a quick start, StockChartNet also provides a "Picks" section, which for a complete market, shows those stocks that have just entered the Buy section.
  
  There is no way you can manage ALL the stocks in a market - you won't have enough capital to be holding every stock. So choose stocks that are of interest to you, or are of interest to the market. Stocks that are in the news are also good stocks for trading. Market opinion is strong on these stocks, causing them to trend well, and will therefore respond well to StockChartNet's indicators. It's no good holding a stock that has low daily volume - it will be too difficult to buy or sell when you want to.
  
  Always check the "Volume"/"Value" column in your portfolio listings to make sure the trading volume is good.
  
  

• What about tracking performance?

  StockChartNet provides a number of charts for the performance of your portfolios. The example below shows portfolio growth over time.
  The purple line shows how your cash balance goes up and down as you buy and sell your stocks.
  The black line shows working capital being introduced in February, a fresh input in May and a withdrawal in July.
  
  
  
  

Try it out

• Free Evaluation

  Don't forget: you can try out these features and more by getting a free 20 day evaluation. There's no obligation to purchase.