SHARETIPSINFO >> Articles Directory >>How to buy stocks at low and sell shares at high?
It is not only you – but all the traders in the stock market are searching for that magic formula in which they can buy the stocks at a lower price and sell them high. But it is not as easy to do as it seems to. Movement of the stocks at the stock market is highly unpredictable and there are so many underlying factors that control the ups and down of the stock prices. So when the price of the stock is falling you will never know when it will actually stop falling and go up in the stock market. It is similar when the stock is going up, if you don’t know for how long the stock will go up in the market you will never know when it is the ideal time to sell off the stock and take your profit home. So, it is the same dilemma that the investors go when the stocks is soaring at the market or falling.
The key for success lays in the method that helps you to determine the optimum high and low price level of the stock for giver time frame. If that is known to you, you are the best trader. But unfortunately there is no surefire formula to detect the highest and lowest price level for the stocks. Remember that every stock has an optimum price level for a given time frame. Every stock takes sometime to reach that level. Once the stock reaches that price level it will either fall or remain at that level with little movement. This is true for the opposite scenario as well. When the price of the stock reaches the least price level it will definitely go up in the market. Technical analysis of the stocks is the best and most widely used method for determining the price range of the stocks for a specific period of time. More flawless your analysis is more accurate your trading will be.
What is the process of technical analysis?
Technical analysis is a method in which the price of the stock and the volume of trading are considered to predict the future movement of the stock. Analysts perform the technical analysis by considering different factors like cycle regressions, relative strength index, moving averages, regressions, and inter-market and intra-market price correlations. These are the factors that are considered to draw graphical representation of the price movement of the stock. This graphs are used to project the movement of the stock for a given time and then the type of the graph is compared with the historical data and other aspects to predict the future movement of the stocks.
There are different principles and methods of technical analysis that are followed by experts all over the world and here we are presenting the three most popular ways of technical analysis.
Candle Stick Charting – Developed by Homma Munehisa in the 18th century this is perhaps the most popular method for technical analysis. In this method the price movement of a stock is predicted through bar style charts. The colored bars in the chart are used to project opening price, closing price, high and low price of the stock of a day or for a period of time.
Elliott wave principle - Ralph Nelson Elliott was the developer of this principle. In this theory the movement of the stock market is explained with the cyclic movement of the psyche of the investors of the stock market.
Dow Theory – This theory was proclaimed by Charles H. Dow and this theory is based on six principles.
- There are three types of movements in the stock market.
- There are three phases in stock market trends.
- Stock market discounts all news.
- Market trends should be confirmed by trading volume.
- Market average should always confirm each other.
- Definitive signals prove that the market trend has ended.
These are the methods of technical analysis and you can depend on any one of these methods to predict the high and low of the stocks. Once you have rightly predicted the optimum price level for a certain time period you can easily buy the stocks at low and sell them high to get the desired profit.
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