Stock Market Trends – Spotting Trends and Patterns

Spotting Trends and Patterns

Many new investors are easily overwhelmed by the sheer volume of stocks that are traded on the market each day. It can seem impossible to be able to keep track of what’s going on with the whole market, especially when you realize that there are major markets in just about every developed country in the world. Because of the size of the market, many investors decide that they will only pay attention to their stocks, and will ignore movements that are going on elsewhere, but this can be a dangerous way to approach the market. It’s important to pay attention to stock market trends in the market as a whole, because they can give you important clues about what is likely to happen to the price of your own stock.

In order to get a good idea of the general direction in which the market is headed, all you have to do is take a minute to evaluate two characteristics, price and volume. By looking at whether or not the prices of a certain industry or stock are increasing or decreasing, and how many investors are participating in the trading of that stock, you will get a good idea of whether there are more buyers or sellers in the market, which in turn will tell you whether the stock market trends are bullish (increasing) or bearish (decreasing). Basically volume is responsible for indicating movement in the market, and price is responsible for indicating the direction of the movement.

One of the most important reasons to pay attention to stock market trends is because they can let you know when a change is coming in the market. Knowing whether the price of your stock is likely to increase or decrease in the near future is essential for making smart decisions about whether to buy more or sell what you have.

It’s important to remember to trade with the direction of the stock market trends instead of against them. This does not make you a follower; it simply makes the most sense for investors that want to make money in the market instead of losing it. Watch out for sharp increases in price without a significant increase in volume to support it, as these are usually suspicious changes that will usher in a reversal in value. Also, be on the lookout for a decrease in prices with a high volume level, because this usually means the market will soon start trending down.