Almost Anyone Can Read Stock Market Trends – With Just a Few Tips

If you know how to read the stock market trends, and how to predict the next market moves, you could be the “King of the World”. Yes, that’s how important it is to be able to understand the market trends. Some people say that only the old expert who’s been doing this for decades can read the trends and predict the moves. It’s absolutely impossible for newcomers. In reality, this is just partly true. Yes, someone who’s done it before can do it again. But that doesn’t mean that a new entrant cannot really understand the changing trends. He/she can, with just a few tips.

The Two Most Important Things to Understand Stock Market Trends

If you are trying to make any meaning of the market trends, you should always watch out for two very important things, and they are,

• Price
• Volume

Price – There is of course a general trend of where the market is going, and it is indicated by points. That’s easy to find out. You can find it out anytime online. But what about the points in particular groups or indices? That’s easy too. The market will release a report at the end of each trading day, and you can find out the indices that gained, and also how many points were gained. Now watch this for a while – a month or even 3 months, and you know where individual indices are heading over the short or the mid-term.

For a closer inspection, you must select individual stocks from a particular industry, and then see how the price has fluctuated over time. Can you see a pattern here? Does the curve appear like a Y, or does it just stay within a short range? Can you find anything at all that has caused major upheavals to the stock’s price?

Volume – This is another important area you must watch out. Check out the number of stocks that are traded for a particular company. If the figure is high, then you know that it is a popular stock. Do some analysis to find out the percentage of buyers and sellers. Once you do this, you will know whether the trend is bullish or bearish for the stock. When you have some understanding of the stock’s movement and character, you will begin to see the trend.

Volume will give you an idea about the market movement, and price will tell you about the direction of this movement. Keep this in mind.

Don’t Fight the Market… But Sometimes You Must

It is important that you try to move with the market, and not against it. Sometimes you may find that there is a sudden hike in the price, without any big jump in volumes. You might be tempted to buy in the hope that the price will keep going up for the next few sessions at least. But it might not happen – often there are hidden personal agendas why individuals might want to purchase thousands of stocks of a particular stock. It might be a takeover bid. So there’s no trend here. Stay away. You will probably lose money here.