Share Market

Selecting the right stock is important in the stock market, but more important is the time when one should invest in that stock. Stocks have price movement every day at the stock market. An investor has to decide what is the exact time or more precisely the optimum price range for investing in the stock.

This is because every stock has a potential price for a given point of time and it takes certain time to reach this point after which it is likely to fall or stand still. Investing on a stock that has reached its optimum price is not profitable.

Technical analysis helps in giving an idea about the future price movement of a stock. Certain information like, past performance of the stock, current price of the stock, trading volume of the stock are considered. Basing on these information graphs and charts are prepared. By comparing these graphs of price movement with the previous year’s technical experts decide the future performance of the stock. So, technical analysis is a scientific way of predicting the movement of stock prices in the stock market. It is logically valid and has got predictive power. It is a useful model of analysis that works. The random movement of prices of stock is due to investors. It is they who control the rise and fall in prices indirectly.

The influence of analytical factor over market price is both partial and indirect. Partial because it frequently competes with purely speculative factors that influences the prices in the opposite direction and indirect because it acts through the intermediary of the people’s sentiments and decisions. In other words the market is not a weighing machine on which the value of each issue is recorded; rather it is like a voting machine whereon countless individuals register choices which is the product of partly reason and partly emotion.

Though data has an indirect effect on prices but the cause and effect of movement of prices is the result of buying and selling. Therefore stock prices are the effect of purposeful human action. This action is analyzed by the technical analyst and categorized under different heads to study the market and provide guidelines for the investors to follow. Different principles are followed by the analyst to prepare these graphs and charts which are mathematically transformed data derived from the prices of stocks and trading volume