Investing your hard earned money in the stock market is one of the many concepts that wealth gurus recommend. To win, you must understand how the stock market works. There are so many data sets that can aid you in selecting among the companies you can invest on. Bar charts, bar graphs, pie charts, and 3D graphs can be used to visually interpret the market activity. The following are three of the most helpful tools for stock market analysis in the United States. These can be found for free in nasdaq.com, which is the National Association of Securities Dealers Automated Quotations. It is an American stock exchange and the largest electronic screen-based equity securities trading market in the United States.
1. Nasdaq Composite Graph. The Nasdaq composite is an index used in the stock market of all common stocks and securities that are similar (like the tracking stocks, ADRs, and limited partnership interests) which are listed on the NASDAQ stock market. It has more than 3,000 components. It is followed highly in the USA as one of the indicators of the performance of stocks of growth and technology companies. Since both American and non-American companies are listed on NASDAQ’s stock market, the index isn’t exclusively an American index. The graph in the link will help you understand how the stock market performed over the years, particularly from 1971 to 2007. upload.wikimedia.org
2. Stock Market Tables. Stock market analysts take note of the five tables that indicate Top 5 companies per category. There are five columns that indicate the company and its symbol, last sale, price change net in percentage, share volume and volume percentage change. The categories are:
- Most Active Share Volume. This gets the top 5 highest share volume for the day.
- Advancers. Companies included in this list has the highest positive change (in percentage)
- Decliners. Being the opposite of Advancers, it has the top 5 negative percentage change.
- Most Dollar Volume. This has the highest dollar volume in the stock market even if there are declines in the share volume.
- Unusual Volume. This lists the highest volume change in percentage.
3. Company Index Graph. Each company trading in NASDAQ also has available graphs and tables so that you can analyze and understand historic data. The graph below is from AAPL (Apple Inc.). You can see the Share Price in the upper graph chart, while the volume is in the lower half. This chart summarizes the activity for the day in Apple’s point of view. If you are really interested to dig up details on Apple’s stocks, you can expand the graph available into months and even years.
Stock market analysis is a very comprehensive study and there are so many economic factors and details to check on. However, for a beginner, the three essential things below should be prioritized and focused on. Once you understand this, you will not panic when confusing news are being reported.
- Check on the correlation of a stock’s price with its volume activity (as given by the volume charts and price).
- Based on the chart, determine if the price of the stock has been showing an upward or downward trend. After verifying, you can decide which action you’re going to take based on what you believe is good for you.
- Lastly, based on the charts, you must analyze where the support and resistance levels of the stocks are. Support and resistance are the areas where a particular stock had trouble proceeding past. It is also the area where the stock stops and changes direction.