Talk to most financial experts about the secrets of building long-term wealth, and they’ll tell you that a big part of the road to success revolves around your ability to understand the trends. In the stock landscape, there are various kinds of trends. Some will help you make decisions about your long-term portfolio, while others assist with more immediate decisions.
The most common kinds of trend are secular, intermediate, and long-term. By looking at the averages and information you can gather from these three areas, you can develop a deeper understanding of the market. Some people even reach a point where they’re able to predict possible movements with shares from a slight change or the presence of a new factor in the industry.
What is a Secular Movement?
Secular trends can last for a very long time – often between 1 and 3 decades. These events in the marketplace hold many primary trends in their parameters, and they’re often extremely easy to understand – even for beginners. Most of the time, you can see these activities happening when you look at the price-action chart for an industry or company over a period of several years. If you were trying to decide what kind of industry to start buying in for your long-term growth strategy, you may use secular movements as a way to make your decision. These can help you to see which industries are having the most consistent growth.
What About Intermediate?
In any primary trend, there are movements known as intermediate actions, which keep market analysts and journalists constantly searching for information about why industries can suddenly go up and down in value. Sudden directional turnarounds and rallies make up these activities for the most part, and they’re usually a result of something happening outside of the stock market, such as a political rally. History reveals that rallies in bull markets are common, while the reactions are usually weak. On the other hand, bear reactions are stronger, with shorter rallies. Hindsight also indicates that there are three intermediate cycles for each kind of market.
When you’re practicing your strategy on a paper trading account and seeking out new opportunities for growth, you’ll need to think about the long-term trends. Veteran analysts often use software solutions to help with this. You can check things like the rate of change, which allows you to see the momentum in a specific area based on long-term information.
With the right rate of change strategy, it’s easier for some experts in the industry to begin predicting what might happen in the future, based on the evidence of what has happened in the past. Although there are no guarantees that history will consistently repeat itself, it’s always easier to make decisions when you have historical evidence to guide you in the right direction. Remember, the more you use trend analysis to examine your opportunities, the more you can learn from the purchases and sales you engage in. Take advantage of any chance to learn more about how your chosen industry works.