Identify Stock Market Trends

by : teahupoo

People who are part of the stock market and investing are always talking about how they could really use a psychic to help them pick stocks. Picking stocks is one of the most time consuming and grueling parts of being an investor or stockbroker. Most of their days are spent trying to predict the outcome of future days with the market.

Many people do not believe that investing is just about guessing what a stock will do. To most people investing is about watching the market and paying attention to each and every move. By paying attention to all aspects of the market it is possible to reap the biggest rewards possible.

Usually the stock market and individual stocks will move together. When a stock is steadily growing it is usually during a time when the market is growing and this is called a bull market. When a stock is declining the market may also be declining and this is called a bear market. Of course the market will have its ups and downs but the average trend will flow either up or down.

In order to determine what direction the market is going it is necessary to have two pieces of information; price and volume. You will need to have the prices of the trend of prices of stocks. The volume is the number of stocks that are currently being traded.

How to Determine Price

In order to determine price stockbrokers and investors will look at three major indicators that include: The Dow, S&P 500 and NASDAQ. Investors are helped by looking at these indicators and will analyze them to try and determine if the market trend is going up or down.

How to Determine Volume

Volume is easy to figure you by simply looking at the daily sales from the markets. Most stock websites and financial companies will have the daily sales volume numbers easily available to anyone whom requests them.

A high volume day is when both the prices and volume are up. During these bull times many investors feel most comfortable purchasing a new stock. On the other hand, when the market has low prices but there is a high volume, it can signal a time of potential trouble, because larger investors are pulling their money out of the market.

When the market is experiencing many down days there could be a reversal of the market or at the very least a stall. Because large firms and institutions are buying and selling so often, they can actually control the market and its movement.

By watching for changes in the market you can be ready for any potential market changes that may effect your earnings.