How You Can Predict Stock Market.


If you ever talked to anyone about investing, the first thing they say is "this not a piece of cake". But it actually is not hard to understand, you need information and analysis of that information.
But,
Lack of knowledge makes people assume problems which are not actually.
To solve this misconception read the full article. 


Key Pointers
 • Business Fundamentals
 • Dividend Yield.
 • Interest Rate.
 • Trading Volume.
 • Trend.



Business Fundamentals.

These are the key factors used to evaluate the functioning of market. You must have proper business analysis because if you are just predicting the market you are eventually going to fall because share market is never the same.

One must have full understanding of the business model and if the business model is good it doesn't matter if the price of the company stock, something there are situations when a good business is low and a low performing business is highly evaluated.

This should not be the case to speculate the market as it always keeps on changing. Always keep faith in good business models and they surely shows the growth.


Dividend Yield


Dividend Yield is calculated by dividing the annual dividend paid on each share by its current price.

For example-   If a stock  paid an annual dividend of Rs. 22 and the current market price is Rs. 440, the dividend yield of the stock is 5% .

If the dividend yield is low, the share price is relatively higher than the dividend paid and hence the stock may be overvalued.
This indicates a possible decline in the future.

A higher Dividend yield, on the other hand, means subdued interest in the stock and that the company is trying to woo investors by paying higher Dividend.
It means the stock price is undervalued.


Interest Rate 


Changes in the interest rates impact companies. Conventional wisdom says one must buy shares when short term rates are low and sell when they are high.
A high put-call ratio indicates an overcautious stance by market participants and hence there is less chance of the equity market falling further.

Usually, short-term rates are lower than they long term rates as the latter factors in uncertainty in the long term.
However, when rates on short term securities are higher than that on long term ones, it hints at a possible recession.


Trading Volume


Trading volume indicates the number of shares or contracts traded in the market. It tells if a particular price trend is supported by market players .

If the price of a share is increasing with higher than normal volume, it indicates investors support the rally and that the stock would continue to move upwards. However, a falling price trend with big volume signals a likely downward trend.

A high trading volume can also indicates a reversal of trend.

For example- a drop in the share price with very high trading volume is vied as a sign that the stock has hit the bottom.


Trend 


Share Market Trend Analysis tries to predict trends in the market. If the predicted trend is bull market run, you can ride that until there is a trend reversal.
As an beginner, you can make profit if you move with the trend and not against it.
Share market trend analysis is an aspect of technical analysis that tries to predict the future movement of a stock based on past data.

A share market trend is based on the concept that the past movements are windows to the future trends. There are three main types of share market trend : short-term, intermediate-term, and long-term.

How to Understand Trend's Validity.

• Three Data Points Needed
Only when we have three or more points of contact in a trend consider valid.


Direction 
Trends can move in three direction up, down and sideways.
If you study prices over a long period of time, you will be able to see all three types of trends on the same chart.


• Watch The Slope
The slope of a trend indicates how much the price should move each day. Steep lines, moving either upwards or downwards indicates a certain trend. However, if the line is too flat, it calls into question both the validity of the trend and its predicted powers.



As these are the prediction of the study of Market behaviour they are not full proof, but they can give you results if you use them with proper study.

Stock market needs patience and analysis. It is easy for an beginner to go completely blank entering the trading and investment field, but if is always fruitful when you give proper dedication and smart work.Always learn form the mistake you make.


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