Stock Data You Should Utilize

Published: 12th March 2012
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Stock investment is undoubtedly an exercise in numbers: Knowing what the numbers indicate, and what they essentially symbolize. Because there are literally thousands of companies that a stock investor may consider for investing in, investors trust in charts and graphs to show a company's numbers over time. While the numbers associated with particular value for a stock are very important, the most essential relationship is how the numbers are changing with time. That is why, for each and every basic stock graph, the x-axis is time. Measuring how a stock reacts over hours, days, quarters and years is how an investor considers what stage a stock is in, and what the company's performance is probably going to do in the future.

There are infinite ways of examining a particular stock, but some of the most typical examples are:

-Stock Price: The most basic information on a company's stock is how the price changes over time. A stock's price fluctuates minute-to-minute, depending on how many people or institutions want to buy the stock or sell the stock. This is usually a synthesis of the supply and demand of a stock: If more individuals want to buy it than sell it, the stock price climbs up. If there are far more sellers as compared to buyers, the stock price falls.

After stock price, a lot of the different charts and analysis with regards to a particular stock are still related to stock price, but there are different types of methods of analyzing what the stock price is doing over time. There are many different analyses that one can apply, so we give attention to 3 of the most common here.

-Simple moving averages

SMA is worked out by adding the price of a given stock for a specified number of time periods (such as minutes, hours or days), and dividing this total by the number of time periods. This operates similarly to regular averages as majority of people understand them. For example, a stock that is 10 on one day and 20 dollars on another day, the SMA for 2 days is (10+20)/2 = 15.

-Exponential moving average

EMA is related to SMA, but it weighs more greatly the most recent price information.

-Moving Average Convergence Divergence (MACD). MACD plots a stock's 26-day exponential moving average (EMA) and also 12-day (EMA). These appear to be 2 different lines on a graph. Since 12-day EMA is made up of fewer data points, it's line obviously responds more quickly to changes in the stock price. The 26-day is actually slower to respond to changes, simply because it has 26 days-worth of stock prices to figure in. How will this help a trader? When the two lines intersect, it implies a change in the stock's price trend is happening.

Basically, these 3 analyses apply common sense regarding averages (averages that have fewer data points respond more quickly to change) to check when a trend is starting to occur. Usually, when the line with a lot fewer points in the average (such as EMA 12) intersects with one with more points in the average (EMA 26), you can see a trend is starting to happen. Regardless of whether that trend is pointing up or down aids the investor decide whether it's a good time to buy or sell.
There are numerous analyses that can be done with how a company's stock price changes over time. Stock market newsletter can help a trader understand more of them, all of which help an investor make more educated decisions. For more information about stock market investment newsletter, simply click the link.

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