This approach requires constant evaluation of the market. It is a well-established detail that stock markets also portray cyclic movements similar to occupation cycle. An active investor who is able to identify the turns in the market would be able to buy at bottom (low impairments) and sell at peaks (high prices) and make essential gains out of cyclical investments. In usage however, such gains give the sack be registered only if an investor is able to systematically buy and sell at turning points and if the gains be substantial enough, then it will be useful to cover exercise costs and taxes.
Suppose an investor plans his strategies on the basis of his forestallion of cyclical trends, he will be able to take an investment decision only after a 15% price movement occurs from, say, a peak or trough. Even then, he may register substantial gains over the buy and hold strategy.
Technical analysts have development tools and techniques to study past patterns and predict future price. The basic assumptions underlying technical analysis are as follows:
1. Market prices are determined by the interaction of supply and demand forces.
2. Supply and demand are influenced by a variety of factors both rational and irrational. These include ingrained factors as well as psychological factors.
3. Barring meek deviations, stock prices tend to move in fairly morose trends,
4. Shifts in demand and supply bring about changes in trends
5. Irrespective of why they occur, shifts in demand and supply can be detected with the...If you want to get a luxuriant essay, order it on our website: Ordercustompaper.com
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