Using Stock Price History For Trending
May 1st, 2010Stock price history plays a key role in analytical tools that provide trends for stock trading. A person who is going to be an active trader will want to learn about the different tools and systems that use this history in order to understand how certain systems, methods and strategies are used in successful trading.
Analytical tools for trending can go back as far as twenty years and many successful traders take advantage of this data when they are making decisions. When several companies in an industry are compared it is easy to see common trends and those that are unique to a specific company.
Some industries have significant rises or falls every nine or ten years. These are called long term trends. The price that is the lowest is called the floor, or support and the highest price is called the ceiling, or resistance for the company or industry.
Intermediate trends occur every 3-5 years over the long term. The gains and losses of the intermediate trends may be due to a major adjustment in the industry, a change in leadership, or a change in the organizational structure of a company. Short term trends are short gains and losses that occur over a period of a few weeks or months. These trends are more difficult to analyze because they are usually caused by immediate events that are occurring in the world.
Most successful traders have several analytical tools that work with the stock price history of companies and industries. They can look at the trends and predict with a certain amount of accuracy, when a stock is going to change direction.
Taking time to complete the necessary analysis is what gives the successful trader the advantage when they are making trades and making plans on the correct stop-loss orders and limit orders to set for their stocks.
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