Beginner’s guide to market analysis
According to wealth coach Sandy Jadeja, stock markets mostly trade according to known patterns. If you know what these are, you can improve your odds of getting greater returns. He shares four simple market strategies.
1 LEARN WHEN AND HOW TO WORK WITH THE MARKETS
“Historically, markets tend to be more volatile around October and November. So inexperienced investors might want to avoid trading during this time,” says Sandy.
He adds that the first five days of January are generally used as a guide to how the market will perform for the rest of the year. “If the first five days end on a negative note, investors may wish to consider short-term trading periods – ranging from a few days to a few weeks – rather than holding the stocks for the entire year.”
2 WATCH FOR RANGE PATTERNS
“For example, you notice that the stock market on Monday climbs from 100 to 200 points. On Tuesday, its range is smaller, moving between 110 and 190 points. This means that on Wednesday, markets will look to break out of that limited range.” On these “range days”, Sandy says that if the market breaks higher, then you’d expect markets to climb; if it breaks lower, you’d look for a downward move. “Recognising range patterns means you can take advantage of them to place a quick order on the stock market.”
3 WORK ACCORDING TO YOUR OWN TIME
You don’t need to monitor your investments all day, says Sandy. “You just have to know when to enter and exit the market. For example, the opening time and closing time of the Singapore market (9am and 5pm, respectively) will often be when the majority of market movements will take place for the day. You may choose to come in just after opening and before closing to put in an offer.”
4 DO YOUR HOMEWORK
Don’t just rely on studying trading patterns. “You need to put in time, effort and money to become proficient,” says Sandy. If you intend to make this a lifelong method of earning a passive income, consider investing in a computer program that will help you do market research. He adds: “These types of intelligent software can recognise known stock market trading patterns and keep you updated on changes, so you don’t have to put in so much time to manually study your stocks.”