As anyone who has followed the news will know, commentators often refer to the stock-market as either ‘’bullish’’ or ‘’bearish’’. These synonyms are used as metaphors for general market sentiment. When the mood is bullish, there is more buying than selling and asset prices increase accordingly reflecting the demand force. When the mood is bearish, there is more selling than buying and asset prices decrease accordingly reflecting the supply force.
Stern Options Graphic Trend Analysis Tools.
Stern’s online trading platform is equipped with state-of-the-art tools to make graphic trend analysis as easy as it technologically possible to do today. Consider the snap-shot for the EUR/GBP currency pair. As indicated by the orange arrows, the user is able to switch between two graphic trend analysis tools.
The common line graph (shown top), which shows a simple chronological perspective, and the candlestick chart (below), which shows a detailed pattern of reversals in chronological order.
Trends involve upward and downward movements. These movements can be understood as corresponding respectively to bullish and bearish market sentiment. However, this understanding is only a very general assessment of what is actually shaping individual prices. The user can also switch the time signature on these charts and graphs. Using the buttons to the left of the orange arrows, the time signature can be switched on a menu of minutes, hours, and days. These controls give the user more power to focus analysis on definite time scales, and this is particularly advantageous when the user already has more detailed information about news and other influences shaping market sentiment.
Candlestick Trend Analysis.
Candlestick charts are similar to bar-charts. But candlesticks throw more light on the problem of trend analyses. A single candlestick consists of, (i) a body, (ii) a wick, and (iii) a fuse. The body represents the magnitude of the ‘opening’ and the ‘closing’ of a course of price movement. The wick and the fuse signify the highest and the lowest points of the course of movement.
A green candle indicates the asset’s opening price is lower than its closing price. A green body will always be created when the close is higher than the open. This type of candle shows that buyers (i.e., bulls) dominated the asset’s price because the price increased over the course of the movement. However, this is not enough information to lead the user to predict what will happen next. Therefore a red body indicates that the asset’s closing price is lower than its opening price. This candle shows that sellers (i.e., bears) dominated because the price traded downward over the course of the movement.
Applying Graphic Trend Analyses.
Graphic trend analysis is concerned with making technical analysis of increasing and decreasing asset prices in order to understand trend patterns which can be used to inform decisions about the future movement of those prices based on past data. Therefore the principle that says, ‘what has happened in the past tends to suggest an idea of what will happen in the future’ is relevant here. A trend may be defined as, ‘the general direction of price movement over a given period of time’. Trend analyst try to predict the trends commonly referred to as bull runs and bear runs, and watch them until the data suggests a trend reversal is about to happen, i.e., from a bear market to a bull market. There is no specific minimum span of time required for a direction of price movement to be considered a trend at all, but in principle, the longer the direction endures, the more notable the trend.
Stern’s state-of-the art platform equips the user with accurate and relevant tools which make the task easier. Accurate trend analysis is vital because proper awareness of trend movements will lead to profit for an investor.
Stern will teach you how to do graphic trend analysis.
Stern Options have established their reputation in part because their account holders have free-to-use access to comprehensive online binary options educational materials.
The importance of proper trend analysis cannot be over-stated. Stern’s expert team of analysts have composed a set of didactic videos and instructive manuals covering all aspects of investing through binary options. All are equally valuable as training materials, and to make sure that account holders can learn to interpret charts, graphs and the science of price movement properly, their online materials are arranged for all levels of investor, from the beginner to the advanced.
If you have any questions at all about the training materials, Stern’s customer support team can help. More importantly, as an account holder your appointed account manager will be available to clarify anything that is not clear or that you are not sure about.