You know the basics — now sharpen your edge. Learn to read charts like a pro, evaluate real companies, and build a portfolio that can weather any market.
Charts aren't fortune-telling — they're a read on crowd psychology. Here's how to spot the setups that matter.
Beyond single candles, recurring price shapes like head-and-shoulders, double tops, and triangles reveal when a trend is likely to continue or reverse. These patterns form because human behavior — fear and greed — repeats itself.
Spot the setups other traders are watching too Builds on: Support & Resistance (Beginner)The Relative Strength Index measures how fast and how far a price has moved, on a scale of 0-100. Readings above 70 suggest an asset may be overbought; below 30 suggests oversold — an early warning of a potential pullback or bounce.
Catch stretched moves before they snap backThe Moving Average Convergence Divergence indicator compares two moving averages to reveal shifts in momentum. When the MACD line crosses its signal line, it's often one of the earliest clues that a trend is changing gear.
See momentum shift before price fully confirms it Builds on: Moving Averages (Beginner)Bollinger Bands wrap a moving average in an upper and lower band based on volatility. Bands that squeeze tight often precede a big move; bands that stretch wide signal an already-extended market.
Know when calm is about to break Builds on: Volatility (Beginner)No single indicator is reliable on its own — they all lag or lie sometimes. The real skill is combining two or three (say, a trend line, RSI, and volume) and only acting when they agree. That agreement is called confluence.
Filter out false signals by demanding agreementMove beyond the ticker symbol. Here's how to read what a company's numbers are actually telling you.
The income statement shows revenue, expenses, and profit over a period. Look beyond the headline number — is revenue growing, are margins expanding, and is profit coming from the core business rather than one-off gains?
Separate real growth from accounting noiseThe balance sheet shows what a company owns versus what it owes at a single point in time. A healthy balance sheet has manageable debt relative to earnings and enough cash to survive a downturn without panicking.
Avoid businesses one bad year from troubleProfit can be shaped by accounting choices; cash is harder to fake. Free cash flow shows how much real money a business generates after running and investing in itself — the fuel for dividends, buybacks and growth.
Cash flow tells the truth profit sometimes hidesGrowth stocks reinvest everything to expand fast and rarely pay dividends; dividend stocks are typically mature, stable businesses that return cash to shareholders directly. Neither is "better" — it depends on whether you want income now or growth later.
Pick companies that match what you actually want Builds on: Dividends (Beginner)Even a great company can be a bad investment at the wrong price. Comparing metrics like P/E, P/S, and PEG ratio against a company's own history and its peers helps you judge whether you're paying a fair price or chasing hype.
Buy quality without overpaying for it Builds on: P/E Ratio (Beginner)Picking good assets is only half the job. Here's how professionals combine them into a portfolio that holds up.
How you split your money across stocks, bonds, cash and other assets drives the vast majority of your portfolio's long-term risk and return — far more than which individual stock you pick. Get the mix right first.
The single biggest lever you actually control Builds on: Types of Assets (Beginner)If your 20 holdings are all tech companies, they'll likely rise and fall together — that's not real diversification. True diversification comes from combining assets that don't move in lockstep, so when one zigs, another zags.
Smooth out the ride without giving up returns Builds on: Diversify Instead of Betting on One Stock (Beginner)Winners grow to take up more of your portfolio over time, quietly shifting your risk higher than intended. Rebalancing — periodically trimming winners and topping up laggards — brings you back to your target mix and locks in gains.
Systematically sell high and buy lowEven a great conviction idea shouldn't dominate your portfolio. Capping any single position at a sensible percentage limits the damage if you're wrong, without capping your upside if you're right.
Survive being wrong so you can profit from being right Builds on: Diversify Instead of Betting on One Stock (Beginner)A 25-year-old saving for retirement and a 60-year-old about to retire shouldn't hold the same portfolio. Your time horizon and how much volatility you can stomach without panic-selling should shape your entire allocation.
A portfolio you can actually stick with Builds on: Think in Decades, Not Days (Beginner)18 terms that separate casual investors from people who actually understand what they own — click any one to expand it, with a plain-English definition and a real example.
Beta measures how much an investment moves with the overall market; alpha measures the extra return earned above what beta alone would predict. Alpha is what separates genuine skill (or luck) from just riding the market.
Two portfolios can have the same return but very different levels of risk taken to get there. The Sharpe ratio divides excess return by volatility, giving you a single number to compare how efficiently different strategies generate their gains. Builds on: Volatility (Beginner).
Maximum drawdown is the largest drop from a peak to a trough your portfolio experienced. A strategy with great average returns but brutal drawdowns can be harder to stick with than a steadier one with slightly lower returns. Builds on: Volatility (Beginner).
Liquidity describes how quickly and cheaply an asset can be bought or sold without moving its price. Highly liquid assets like large-cap stocks are easy to exit; less liquid assets like small caps or property can trap your capital when you need it most. Builds on: Cash & Cash Equivalents (Beginner).
Hedging means taking a position specifically designed to offset losses elsewhere in your portfolio — like holding some bonds or gold alongside stocks. It typically costs some return in exchange for smoother, more predictable outcomes. Builds on: Bonds (Beginner).
Correlation measures how closely two assets' prices move in relation to each other, from -1 (perfectly opposite) to +1 (perfectly in lockstep). Diversification only genuinely reduces risk when the assets you're combining have low or negative correlation to each other.
Rebalancing means periodically buying or selling holdings to bring your portfolio back to its target allocation, after market moves have drifted it away. It forces a disciplined "sell high, buy low" habit rather than letting winners silently grow into an oversized risk.
The yield curve plots interest rates across bonds of different maturities, from short-term to long-term. Normally longer-term bonds pay more. When it "inverts" — short-term rates pay more than long-term — it has historically been a widely watched early-warning signal for recessions.
The price-to-earnings ratio divides a company's share price by its earnings per share, giving a rough sense of how much investors are paying for each dollar of profit. A high P/E can mean high growth expectations — or an overpriced stock; a low P/E can mean a bargain — or a company in trouble.
Asset allocation is the split between broad categories (stocks, bonds, cash, etc.); security selection is picking specific investments within each category. Research consistently shows allocation drives the large majority of long-term portfolio returns and risk — far more than which individual stocks you pick.
RSI is a momentum indicator, scored 0-100, that measures how fast and how far a price has recently moved. Readings above 70 are often read as "overbought" (may be due a pullback); readings below 30 as "oversold" (may be due a bounce) — a signal to watch alongside price, not a standalone buy/sell trigger. Builds on: Chart Patterns, RSI (Intermediate lessons).
The Moving Average Convergence Divergence (MACD) indicator tracks the relationship between two moving averages to highlight changes in momentum direction and strength. When the MACD line crosses above its signal line, it's often read as a bullish shift; crossing below, bearish. Builds on: MACD, Confluence (Intermediate lessons).
A moving average plots the average price over a set number of recent periods (e.g. 50 or 200 days), smoothing out day-to-day noise to reveal the underlying trend. Price crossing above or below a key moving average, or one moving average crossing another, is a widely watched trend signal.
Support is a price level where buying pressure has historically stepped in to stop a decline; resistance is a level where selling pressure has historically capped a rally. Neither is a guarantee — they're zones where the odds of a reaction have historically been higher, not hard floors or ceilings. Builds on: Chart Patterns, Confluence (Intermediate lessons).
Free cash flow (FCF) is the cash a company generates from operations after paying for the capital expenditures needed to maintain and grow the business. Unlike reported earnings, it's harder to distort with accounting choices, making it a favored measure of a company's real financial health. Builds on: Cash Flow (Intermediate lesson).
The PEG ratio divides the P/E ratio by the company's expected earnings growth rate, adjusting the "is it expensive?" question for how fast the company is actually growing. A high P/E can look far more reasonable once growth is factored in — or a low P/E can look less like a bargain if growth is stalling. Builds on: P/E Ratio (above), Valuation (Intermediate lesson).
The debt-to-equity ratio divides a company's total debt by its shareholder equity, showing how much of the business is financed by borrowing versus owners' capital. Higher leverage can amplify returns in good times but also amplifies losses and financial stress in downturns. Builds on: Balance Sheet (Intermediate lesson).
The payout ratio is the percentage of a company's earnings paid out as dividends, rather than reinvested in the business. A very high payout ratio can signal limited growth reinvestment, or a dividend at risk of being cut if earnings dip. Builds on: Growth vs Dividend Stocks (Intermediate lesson).
Put these skills into practice or push into advanced territory.