One of the most interesting things in the stock market, is watching people trade stocks and engage in crowd behavior. This has been very evident in the recent market decline. When the market was going down, the crowd was selling into at any price, causing the stock market crash. In the media, at the same time, all the voices were discussing selling, selling, selling in a uniform chorus. As you can see from the market action, the herd suddenly stampeded, almost without warning into a 13% market decline in only five weeks until the end was reached and even then extreme volatility prevailed. What should your stock trading strategy be?

stock market analysis is the process of investigating and studying data on existing stocks and trying to predict how they will do in the stock market. This is used by most traders due to the fact that stock prices can change from moment to moment, but they normally have a pattern of either going up or down that can be analyzed and followed. Some investors use what is called technical analysis. This is mostly used to figure out the possible return the stock will provide its owners. When traders get tips on various stocks it is usually after this sort of analysis.

On the other hand, if you were net short 50%, you made $75,000 in only a few weeks. As you can see, being a market maker you will either learn to anticipate and profit from the crowd, or you will find yourself serving chopped liver as a clerk in a Wall Street delicatessen in short order. Getting carried away with the crowd is a sure ticket to the deli. I didn’t average 300% per year gain on my trading positions by being slow to learn. If I was wrong, the market kicked my ass hard. So you learn fast to develop the right reflexes. Now here comes the tricky part for any stock market trading as a market maker – when to load up, when is the bottom, when to dump, when is the top?

In the stock market, you can buy and sell the stocks you own. Besides this, there are several strategies such as short-selling, which means you do not own the stock, but sell it nevertheless (by borrowing it from your broker at a fee) because you feel its price is going to drop – and when the price does drop, you buy it back. Plus, you can buy or sell stocks at a future date if you trade in the derivatives market. Then, you can also indulge in margin buying, which in simple terms means you borrow money to buy stocks, thereby exposing yourself to debt.

When it comes to tracking stocks one of the methods is through charts and patterns. A system of bar charts is normally used that represent periods of time (like daily, weekly, etc). The top of this chart for stock market analysis would list the high price while the smaller bar chart to the right lists the opening and the other one lists the closing prices. Another chart sometimes used is called a candlestick chart. It uses a slightly different system of markings to show the highs and lows and prices of the stock it is following. It also uses a color system, with red or black if the stock’s closing cost was lower than the one prior to this one or white and green if it was more.

One more observation. If you can figure this out, let me know. The best stocks I have found have been in bear markets. True, you could buy just about anything in a bull market and be up, but the highest percentage gains in my book have been in bad markets. Not terrible markets, bad markets. I have never figured out why.

Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Cool Checks In Deflationary Times You have full permission to reprint this article provided this box is kept unchanged.