There are many reasons to learn to read a stock chart, with the foremost being to protect your hard earned money. Professional traders learn not to just look at how much money they can make with a trade, but to control for the risk of a big loss. Every trader worth his salt knows that taking small losses keeps you in the game when a large loss can cripple you. This is the same as retreating from a battle to fight again. Knowing where a stock has support by reading the chart can help you minimize any losses.

Stock charts are a collective graphical representation of the psychological 'mood' of the market players. When the market is in an Uptrend, the players (traders, investors) are in a 'Bullish' mood and stocks are more likely to go up. When the market is in a downtrend, the players are in a 'Bearish' mood and stocks are more likely to go down.

Learning to read stock charts will allow you to identify the 'mood' of the market as well as knowing what signals mean a stock is going up, down, sideways or reversing.

Analyst recommendations on a stock are important and set the valuation level, but they do this without considering the buying and selling in the market that actually sets the price. These analyst valuations are all relative to the valuations of the stocks of companies with similar businesses.

When the tide goes out all ships go down. This is the same for stocks, as the stock of a company doing great business will still fall when the market falls. Reading charts can tell you when this is happening.

Computerized Trading - Estimates as to the volume of stock traded via program trading in today's market are as high as 46%. Computers do not read The Wall Street Journal or interview a CEO. Computers do not always trade off price-earnings ratios or analyst recommendations.

Computers use STOCK CHARTS to generate a large percentage of their trades.

James Simons is one of the most successful hedge fund managers in the history of the financial markets. Year in and year out you can find his name at the top of the hedge fund manager’s performance list.

Renaissance Technologies, Simons' Hedge Fund, trades a very high percentage of their stock via mathematical models and program trading which use information from charts.

When you go golfing you do not hit the ball with just your driver or just your irons or putter. For longer term investing you would use the analyst recommendations like using your driver. Then to accomplish the next step in your goal of getting that ball in the cup, you use your irons. Your irons could be thought of as reading your stock's chart for trend lines and where support and resistance levels are. Your irons would be protecting your money. Your putter could be thought of as the fine tuning of knowing when to buy or sell to get in or out at a good price and reading a chart is important when doing this.

Learning to read stock charts completes your set of clubs and skills and fills your golf bag. More clubs, more tools and more weapons.