Stock Market Today - Evaluating Market Signals

If you've recently decided to get involved with stock market investing

, you should take a moment to congratulate yourself on being a brave consumer. It's no secret that the market has been struggling lately, and many people have chosen to put their money into safer outlets for earning interest, like high yield savings accounts and certificates of deposit, even though these often take many years to equal what you can make in a year of stock market investing. It's important that new investors are educated about the state of the stock market today, and the best way to evaluate the signals the market is sending about its own health.

The first thing that new investors should understand about the stock market today is that there are many different things affecting the prices and price movements that you see on the charts. Especially in times of relative instability, it's important never to assume that there is only one or two things responsible for the prices you see, or that you can rely on these factors to be consistent. Supply, demand, political stability, portfolio diversification and market participation can all affect the prices you see in the market, and all of those factors are fickle at best.

If you're going to be successful in the stock market today, you're going to have to have access to a method for evaluation that will allow you to interpret market signals and decide on the best course of action that they are suggesting. One such method is technical analysis, which is a popular practice of using past data about price movements to help predict the direction in which a stock's price is likely to move in the future. If you have a good idea how a trend or pattern is going to resolve itself, you're in a better position to "buy low and sell high" with success.

It's important to remember that even in the highly technical stock market today, technical analysis isn't the only approach that can guide your stock purchasing decisions. Many traders who specialize in long term investments and commodities prefer to incorporate aspects of fundamental analysis into their stock market strategies. Unlike technical analysis, fundamental analysis is more concerned with evaluating the qualitative influences, like company history and public opinion, to decide which stocks present the greatest opportunity for making a profit. No matter which method you choose to use, it's important to never lose your grasp of common sense or the reality that there is always risk involved.

by: Aaron Livingston

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