How to make a stock trend analysis?

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How to make a stock trend analysis?

The good news is that there are quite a number of stock trend analysis services out there that are doing this for you and that are training you in making a technical analysis of stock trends.

When looking at different stock trend analysis methods, the first aspect to check is on what the analysis is performed. Is the analysis done on the trend of an individual stock price of a company or is the analysis done on the movements of an overall stock index for a certain stock market. There are no rights or wrongs here.

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We can only make the note that discovering trends in the share price of one particular company does not imply that these trends are also applicable to other companies. On the other hand, a trend in the stock market index is shared by most companies that are listed on that particular stock market.

Furthermore, please keep in mind that the share price fluctuation in an individual company is much more subject to the daily news for that particular company.  Trends for individual companies can be more difficult to identify than for the overall market and could therefore be less reliable.

Within the range of technical analysis tools, there is a lot of variety. Based on historical analysis, certain patterns are expected to be followed more often than other patterns by a certain development in the market. It takes a study to recognize all the different patterns, their possible implications and their likely limitations.

Other stock trend analysis methods just focus on identifying the current trend in the market. Their objective is to identify this trend as early as possible during the trend and with an as high probability of being correct about it.

These two objectives compete with each other. If the market has been rising for a year, everybody can see that there was a rising trend. However, if you want to capitalize on this trend as an investor, you like to have jumped on that trend as early as possible. And when a trend is not clearly established yet, the identified trend is maybe no trend at all.

In summary, we can say that there are different methods of stock trend analysis. Each of them would require some study to master them. The good news is that there are people out there who are teaching and sharing their methods. Each investor is advised to understand a certain method clearly before putting his or her money on it.

 

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nuclearrambo

Salil is an electronics enthusiast working on various RF and Microwave systems. In his free time he writes on the blog, talks over ham radio or builds circuits. He has Yaesu FT2900R VHF transceiver, FT450D HF transceiver and a TYT UV8000E Handheld transceiver.

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