Examples of Using Technical Analysis ForTrading

The stock market uses several words that may not necessarily mean in its truest sense.  The words may have been used by the people in the trading floors of stock market exchanges.  When talking about Technical Analysis of stock market, it has nothing to do with technical matters involved in the trading of stocks.

The stock market exchange may have a graph to show to chart the “movements” of stocks in trade.  It shows the trend from the opening price at the start of a month then charted on its ups and downs until the end of the month.  There are a couple of computations used to determine some averages of share prices.

Bearish trend

When stock market trading is slow or on a slump it is referred to as bearish.  There is a nice relation because bears eat and store a lot of energy to gain fat.  When winter comes it hibernates until the season is over.  In business sense in the stock market, it means the market has reached some peak and is on the down trend to more stable share prices.

It is on the bearish trend that many investors buy shares that they know will give big gains once the market recovers from a slump.  The make a killing once the market goes up again and their speculated shares make big gains.

Bullish trend

This is the opposite of the bearish trend technical analysis.  The bull is used to define this stock market trend because of a bull’s characteristic in a bull fight where it is always on a charge.  Of course in this market situation not all stocks are in the uptrend.  Some may be holding on to their price while a few is receding a little.  Frequently traded stocks will most likely be the ones on a bullish charge.