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How to Spot a Healthy Trend or Move in a Stock Chart…

August 12th, 2014

People constantly wonder how spot a healthy movement in a stock...

So what is the point of knowing if a stock’s price action or movement is healthy? If you understand a healthy move you will be able to stay in the trend longer and make more money.  This will give you a better insight to when a stock is ready for a pull back.

For example, a stock moving exceptionally fast is more likely to have a pullback than a healthy stock that moves up with the trend slow and steady…

Spotting a Healthy Move: You Just Know

Spotting a healthy movement in a stock is similar to spotting a healthy person on the street… you can just tell they are healthy or unhealthy by just looking at them!

healthy-unhealthy

(I’m sure in the photo above photo you can tell which person looks healthier... right?)

As you get better at knowing and getting a feel for a stock’s price movement, you will just be able to tell if a stock is healthy.

The Simple Way to Predict a Healthy Movement

One of the best ways to see if a stock is having a healthy run is to just draw an imaginary line at around the 40 degree angle. (This will give you a better understanding in how the price is moving compared to this level).

chart-healthy

If the stock’s price action is above the 40 degree line (meaning it is moving up like a rocket ship) then it is probably an accelerated move and UNHEALTHY! (This means it will most likely pull back soon).

If on the other hand a stock is moving slow and steady (about the 30 degree angle) then that stocks price action is healthier. This means the run can continue longer as it is more stable.

chart-pullbackjpg

To understand what a healthy movement in a stock is, try to dray an imaginary line, right around the 40 degrees level and try to understand how the chart is moving along that line.

Final Insight:

Remember that some stocks explode and can continue to move on an accelerated move for quite some time. These are unhealthy movements – but just because they are unhealthy does not mean you cannot trade them!

When drawing your imaginary lines you always want to stick to drawing the lines on a daily time frame. If you draw it on a weekly time frame this is okay as well, however try to avoid the intraday movements as they are far less predictable and can whipsaw you around.

This insight goes a long way to finding healthy movements in stocks. It is healthier if a stock has pull backs or consolidation patterns.

And if you know which stock chart looks and appears healthy then it will give you an idea of which stock you can stay in longer and in the end… make more money.

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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This website and content is for information purposes only as Rise2Learn, TradersFly, and Sasha Evdakov are NOT registered as a securities broker-dealer nor an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Rise2Learn, TradersFly, and Sasha Evdakov cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Rise2Learn, TradersFly, and Sasha Evdakov in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Rise2Learn, TradersFly, and Sasha Evdakov accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.