From grizzly stock market veterans all to the way to savvy market observers, almost every one would concede that in the business of trading two things are of the essence: timing and trends.
Trends are important because they affect the market in big sweeping tides. Timing, on the other hand, is the learned investor’s inner business radar at work. The more experienced he is, the better is his sense of timing.
Market trends
Market trends are the tendency of particular stock prices to go up or down for considerable periods of time – triggered by some big events, influential persons, or sometimes whatever is the current fashion.
A simple case in point is the September 11 terrorist attack. It had set off a trend where stock market prices for tech companies went down.
Product demands
World events would also have great effects on the stock market. Oil crises and some political problems in concerned countries would definitely have an effect on world oil prices.
To those who have to buy oil and gas, the prices would go high. Those with investments in oil stocks would be raking it in because of the high demand and the high price. Demand for a product affects the price of its stock.
Price fluctuations
The first factor that influences price is the basic law of supply and demand. If the company has only a few shares of stock to sell, and there are a lot of interested buyers, there would a rise in price.
Working the other way around is the fact that when there are a lot of shares but few interested buyers, the stock’s price goes down.
Outside factors
Usually, big world events affect stock market trends – wars, the economy, oil prices and currency collapses. New oil discovery does the same influence on the market, albeit the other way around.
The upward movements in prices of certain market sectors that last for months or years are nicknamed bull trends. Those that are on the down movement trend in prices are called bear trends.
Timing
Timing is that special knack of investors who knows the exact time to buy or to sell any stock. For most investors, timing is simply being alert.
They watch market prices closely, keeping an eye on the rise (or decline) of prices looking for a trend. If they see a trend and the market is rising, they tend to hold onto their stocks.
On the other hand, if the market price of a stock seemed to go on a downward roll, most investors tend to sell their shares because they want to hold onto the profits they have already made.
Timing, for most investors, is actually identifying the trends in the market needed to identify in turn the right time to buy or to sell. The enterprising investor takes advantage of news about the economy, interest rates, conflicts and many others.
Last words
Timing and trends in stock market mean many different things to different investors. Those who want to make a quick dollar do their buying and selling regularly. However, if you are investing for the future, you do not look at the market the same way as everybody.
There are so many studies that show how a large percent of people try their luck in the stock market are successful because they were able to learn the things that they need to learn the earliest possible time. Since they have learned all the basics, they know how to move forward and create their own windows of opportunities.
Guidelines for beginners
Many people have thought of trading in the stock market once or twice in their lives. The problem is they just don’t know how to start.
For some, the stock market may look so easy considering you just need to make a few phone calls and meet some people and talk to some high brass firms. It is all about presentation they say. But, it's important that you have the know how to say things at the right time.
To those who are seriously considering trading in the stock market as a career, one of the important things that you need to know is the types of stocks to be used in trading. In the stock market, there are basically two types of stocks available: the common stock and the preferred stock.
The type that most individuals hold is called the "common stock” wherein the trader represents the majority of stock and he or she reserves the rights when it comes to voting people in the management as well as also calls the shots when it comes to share in dividends. The other type is called as the "preferred stock". Basically, it is the same with common stock only that the traders enjoy lesser rights. But the good thing about preferred stocks is that the traders do not partake in dividends, thus, making companies have more freedom in deciding the trend of the income from dividends.
If you are just beginning in the stock market, it would be best to look for companies that have bigger profits on their preferred stocks because it means that they earn bigger dividends, which can give you bigger return of investment.
It is also very important to know what does that term "trading stocks" mean. This is one of the most basic things you need to know if you are just starting in the stock market. For starters, it is very important to understand what a stock is, what does trading entails, and how does trading stocks will affect your overall success.
Stocks basically refer to a unit of ownership one has in a certain company. Trading, on the other hand, is the simplest way of saying buying and selling something or a financial tool that is used stock trading. These two are very important when you join the stock market.
It is also very important to understand the methods of trading stocks. Experts say that a beginner in the stock market doesn’t really have to have in-depth knowledge of the minute details of how one buys and sells stocks. The most important thing is that he or she learns the importance of knowing the basics so they would know how to execute the stock trading strategies.
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