Have you ever checked out a stock’s price chart and got noticed the daily ups and downs? Yet, underlying these daily fluctuations may be a certain stock market trend. this will be seen over an extended period of your time.
Nailing this market trend is what technical analysis is about. As a technical investor, you’d check out historical price patterns and form an opinion about stock market trends. Accordingly, you’ll decide your course of action vis-à-vis a stock. this is often why understanding market trends is so important. which is what this section is going to be about—what are market trends; application available selection; the way to identify market trends, and the way to analyze them to form profitable investments.
WHAT IS STOCK MARKET TREND?
As we discussed in an earlier section, stock prices are often volatile within the short term. They don’t necessarily move during a line. However, as you zoom out and appearance at slightly long-term price patterns, you’ll discover a far better-defined market trend.
In general understanding, a trend is that the broad upward or downward movement of a stock market over time. Upward movement is named an uptrend, while those which move lower throughout your time are said to be during a downtrend. Investors have a bent of shopping for stocks that are seemingly during an uptrend and selling those in a downtrend.
WHY SHOULD YOU UNDERSTAND MARKET TRENDS
All the best things happen only with patience and determination in the stock market. Even if this sounds complicated, hold on and implement in your investments.
Understanding market trends is important because it tells you which stocks are expected to move up, and how much risk there is along the way. If you sell before the price hits its peak, you may lose out on good profits. Similarly, if you buy before the price falls to its lowest point, then you may make less profit when you finally sell it.