Trending with stock price history plays an important role for the successful trader. An individual that is active in trading can achieve greater gains when they successfully predict gains and losses in stock prices and makes their trades right before the direction of the stock changes. Many of the strategies and methods for trading are based on trending or analyzing stock price histories.
Trends, or price histories, for industries and companies can go back up to twenty years. When several companies are compared, it is possible to find both company trends and industry trends that make selecting stocks for trading much easier.
These long term trends show rises and falls that occur over the course of nine to ten years. The price of stock that is lowest is called the floor or support price. The highest price of the stock is called the ceiling or resistance for the company.
Intermediate trends take place every three to five years within those long term trends. These gains and losses may be due to a major adjustment in the industry, a death of a leader, or a change in the companies infrastructure. Within these trends are the short term trends which may be from a few weeks to several months. These trends are more erratic and usually are the result of immediate changes in the market or sudden corporate losses or gains.
Most successful traders have several analytical tools that work with the stock price history of companies and industries. They can look at the trends and predict with a certain amount of accuracy, when a stock is going to change direction.
Taking time to complete the necessary analysis is what gives the successful trader the advantage when they are making trades and making plans on the correct stop-loss orders and limit orders to set for their stocks.
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