Tuesday, June 19, 2012

How To Predict Future Stock Price :

It is impossible to predict the future price of stocks, Due to tentative nature of share prices, Stock prices are fluctuate by investor view about company’s future performance and usual growth of the company. As we all know, stock prices will fluctuate always and keeping a tab on them is really a huge challenge.
An investor buys a share of stock by resorting to various approaches that validate his investment by reaping rich profits. Before investing in a particular stock, it is very important to an investor to know about that particular stock financial statement.Here is some important tips to Predict Future Stock Price
·      Be Aware of All News Related to the Markets
·      Study the Chart Patterns
·      Observe the Volume Growth Carefully
·      Know the Resistance Points Well
·      Wait for a Break Out
·      Keep an Eye on Company's Earnings
·      Be Aware of the P/E of the Company

Be Aware of All News Related to the Markets
As a stock trader, which stocks you wish to buy, you must be aware of all news related to that company. From the recent news, you can predict whether it is having a positive or negative impact on the stock price. In case of a good news for a stock, positions can be made in advance and you can make very good profit in intra-day basis to. Good stock research is the key to success in this field.
Study the Chart Patterns
Studying stock chart patterns is very important for all interested in stock trading. Chart pattern analysis can be used to make short-term or long-term forecasts. The data can be intraday, daily, weekly or monthly and the patterns can be as short as one day or as long as many years. Gaps and outside reversals may form in one trading session, while broadening tops and dormant bottoms may require many months to form. Chart patterns help to understand weakness and strength in the stock thus enabling us to predict future price targets.
Observe the Volume Growth Carefully
Increasing volumes can mean that there is growing trader interest in the stock due to some positive news. However, on the other hand, if a stock is continuously breaking down with heavy volumes, then it is a sign that it is going down to a great extent. Generally, it has been observed that there is a substantial volume growth in the stocks of companies before they start their run up. Try to keep a track of the volumes of stocks on a daily basis and calculate the percentage rise or fall in them.

Know the Resistance Points Well
A resistance level is the opposite of a support level. It is where the price tends to find resistance as it is going up. This means the price is more likely to "bounce" off this level rather than break through it. However, once the price has passed this level, by an amount exceeding some noise, it is likely that it will continue rising until it finds another resistance level.

Wait for a Break Out
A price movement through an identified level of support or resistance, which is usually followed by heavy volume and increased volatility. Traders will buy the underlying asset when the price breaks above a level of resistance and sell when it breaks below support.  

Keep an Eye on Company's Earnings
A stock needs to be technically as well a fundamentally strong to go up. So, you should be able to predict how the financial results of a company will be to trade the stock. Good results means increased investor confidence and that implies stock price advancement with good volumes. To predict company profits, you should be knowledgeable about income parameters and updates on mergers, stake sells and acquisitions.

Be Aware of the P/E of the Company
The P/E ratio (price-to-earnings ratio) of a stock (also called its "P/E", or simply "multiple") is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. The P/E ratio can therefore alternatively be calculated by dividing the company's market capitalization by its total annual earnings.
Source : indianmoney

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