How To Understand Direction of Stock Market

Understanding the stock market is not that difficult if you follow some of the basic rules. Check out the charts on your online share trading website or on e-broking websites. Make note of price and volume changes. Stocks will show selling signals. 

If the market is constantly falling, sell off your worst performing stocks first. If the stock market continues to fall, sell more of your poor performing stocks. Wait for few days and keep an eye on the market. If situation doesn’t turns around, consider selling all your stocks. If any of your stocks fall below 10% of your buy price, sell it immediately. If you have done good research on the company and the stock, you can stick to it and wait for the market to recover.

Recovery of Stock Market After Downfall

Stock Market Direction
Every stock market will try to recover after a prolonged downfall and try to rally from low levels. Don’t hurry with small rise in a couple of days. It is too early to say that the market has recovered. Don't rush to buy too early. Wait and watch for at least 10 to 15 days to confirm if a new upward trend has started. 

With a new upward rally, stocks from leading sectors will recover first and other sectors and stocks will follow. So, focus on stocks of leading sectors. Invest in these stocks on first or second base and sell off and book profit on third base. Don’t wait for the stock to increase further and form a fourth base. This can be too risky and the stock may start falling.

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