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 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.
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.
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.
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 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.
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.