When it comes to trading stocks, it's important to understand how to understand the principles of stock market analysis so you can decide which stocks to buy or sell for your portfolio, such as stocks belonging to the S&P 500, which contains some of the most popular stocks in the US from large businesses that trade on both of the US stock market exchanges. Without that knowledge, you could lose thousands of dollars and be totally lost in the system.
Today, I know why trading a stock just as it breaks out can lead to explosive gains, and I know the thrill of watching a quality stock quickly swell my portfolio, but this was not always the case. In fact, I tried out just about every other stock trading strategy first, because I found studying stock charts tedious and confusing. Which stocks should I concentrate on? What should a stock's chart look like? What moving averages should I use? Which oscillators are the best? You would think that as an executive at a financial television channel, I'd have the inside track on slick ways to trade the market, wouldn't you? After all, I regularly rubbed elbows with some of the most influential stock market gurus on the financial seminar circuit. There was only one thing. Each individual was busy selling his or her own unique stock trading strategy. As I bounced from trying one trading strategy to the next, I began to realize that many of these techniques did not work as predictably as I had expected.
Multiple factors go into stock market analysis to see what sort of thing causes the prices to go up or down. Some of these factors include the business' background, the economy, historic trends, or even natural disasters like hurricanes or earthquakes. You can't use a system of stock market analysis over the long term, however, because it doesn't include any information on a business' future potential. But you can use it to keep track of the ups and downs of a particular stock.
Magee was talking about how the field of technical analysis developed, beginning with the early moving averages developed by Charles Dow dating all the way back in 1884. As I read, three things occurred to me: 1. First, some very smart people had been hot on the trail of finding a system of using charts to anticipate stocks' movements for a very long time. 2. Second, charts represented the only visual, factual record of a stock's movement that was not filtered through some financial news analyst or stock market guru. 3. Third, and most important, it actually seemed plausible to make reasonable assumptions, based upon certain charts, as to when a stock was nearing its greatest potential. Could I have finally found the "holy grail" to stock profits I had been searching for?
One more observation. If you can figure this out, let me know. The best stocks I have found have been in bear markets. True, you could buy just about anything in a bull market and be up, but the highest percentage gains in my book have been in bad markets. Not terrible markets, bad markets. I have never figured out why.
Head and Shoulders is yet another stock pattern. It means that the stock first comes to a peak (a shoulder), then gets lower and then forms another even higher peak (the head), and then goes up again, (another shoulder). A very popular stock analysis tool, this one reveals the stock's median cost within a certain timeframe. It is plotted on a chart so that traders can see what the stock's pattern is. This market analysis tool looks at a comparison of the amount of days a stock ends on a positive note and the amount of days it ends on a negative note. It is used over a specified amount of time, normally nine to 15 days. In order to use it, the traders divide the median amount of days the stock goes up by the median amount of days it goes down. The result is added to one and employed to divide 100. Then you subtract that result from 100 to get the stock's relative strength index. Depending on that amount, a trader can tell if a stock is strong or weak. This process uses the amount of shares that were traded plus the cost of the stock. If this number is high, you should sell your stock, but if it is below 30 you should buy more.
Today, I know why trading a stock just as it breaks out can lead to explosive gains, and I know the thrill of watching a quality stock quickly swell my portfolio, but this was not always the case. In fact, I tried out just about every other stock trading strategy first, because I found studying stock charts tedious and confusing. Which stocks should I concentrate on? What should a stock's chart look like? What moving averages should I use? Which oscillators are the best? You would think that as an executive at a financial television channel, I'd have the inside track on slick ways to trade the market, wouldn't you? After all, I regularly rubbed elbows with some of the most influential stock market gurus on the financial seminar circuit. There was only one thing. Each individual was busy selling his or her own unique stock trading strategy. As I bounced from trying one trading strategy to the next, I began to realize that many of these techniques did not work as predictably as I had expected.
Multiple factors go into stock market analysis to see what sort of thing causes the prices to go up or down. Some of these factors include the business' background, the economy, historic trends, or even natural disasters like hurricanes or earthquakes. You can't use a system of stock market analysis over the long term, however, because it doesn't include any information on a business' future potential. But you can use it to keep track of the ups and downs of a particular stock.
Magee was talking about how the field of technical analysis developed, beginning with the early moving averages developed by Charles Dow dating all the way back in 1884. As I read, three things occurred to me: 1. First, some very smart people had been hot on the trail of finding a system of using charts to anticipate stocks' movements for a very long time. 2. Second, charts represented the only visual, factual record of a stock's movement that was not filtered through some financial news analyst or stock market guru. 3. Third, and most important, it actually seemed plausible to make reasonable assumptions, based upon certain charts, as to when a stock was nearing its greatest potential. Could I have finally found the "holy grail" to stock profits I had been searching for?
One more observation. If you can figure this out, let me know. The best stocks I have found have been in bear markets. True, you could buy just about anything in a bull market and be up, but the highest percentage gains in my book have been in bad markets. Not terrible markets, bad markets. I have never figured out why.
Head and Shoulders is yet another stock pattern. It means that the stock first comes to a peak (a shoulder), then gets lower and then forms another even higher peak (the head), and then goes up again, (another shoulder). A very popular stock analysis tool, this one reveals the stock's median cost within a certain timeframe. It is plotted on a chart so that traders can see what the stock's pattern is. This market analysis tool looks at a comparison of the amount of days a stock ends on a positive note and the amount of days it ends on a negative note. It is used over a specified amount of time, normally nine to 15 days. In order to use it, the traders divide the median amount of days the stock goes up by the median amount of days it goes down. The result is added to one and employed to divide 100. Then you subtract that result from 100 to get the stock's relative strength index. Depending on that amount, a trader can tell if a stock is strong or weak. This process uses the amount of shares that were traded plus the cost of the stock. If this number is high, you should sell your stock, but if it is below 30 you should buy more.
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Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Unsecured Money Loans - Get Finances With Collateral Free Loan Option You have full permission to reprint this article provided this box is kept unchanged.
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