Beginner Question.

[umfan92 10]

Well I noticed that the market has good days and bad days. I also noticed that on the bad days, all the stocks on my watchlist go down, every single one of them. And on the good days, every single one of those stocks goes up. Why does this happen? What does it mean? Also what are indications of this behavior? Thanks everyone.

[MadMarketScientist 11]

Hi,

 

It appears there is strong correlation between the stocks in your watchlist. Are they all in the same sector (i.e. all tech stocks) or in related industries? (commodities, energy)

 

See these threads explaining the correlation (beta) of a stock: http://www.traderslaboratory.com/forums/market-analysis/513-do-you-ever-consider-beta-stock.html

 

Good luck

MMS

[Tams 20]

Well I noticed that the market has good days and bad days. I also noticed that on the bad days, all the stocks on my watchlist go down, every single one of them. And on the good days, every single one of those stocks goes up. Why does this happen? What does it mean? Also what are indications of this behavior? Thanks everyone.

 

 

 

you have just discovered the holy grail.

 

and I am not kidding you,

 

most people spent over 10 years in the market and still have not observed this phenomenon.

 

You see, you don't need to be smart,

you don't need to go to the best business school,

you don't need the fastest computer,

you don't need any esoteric analysis,

you don't need any insider tips,

all you needed is to get on the train,

and ride the wave.

When the market is going up, every idiot is a genius.

just close your eyes and buy...

it doesn't matter if the stock is ABC or XYZ,

when the market is going up, every Tom Dick and Harry will go up too.

 

Good luck

and enjoy the ride.

[SIUYA 11]

 

when the market is going up, every Tom Dick and Harry will go up too.

 

Good luck

and enjoy the ride.

 

you just need to get out of the car before Tom, Dick and Harry drive off a cliff.

So what if you get out a little too early and have to walk a few miles its better than getting killed - in the market.

 

Alternatively change your watchlist

 

Unfortunately when it comes to stocks, Tams advice can actually be pretty much spot on.....take a simple strategy, apply it to a basket of stocks - often they will all move together and you have diversified your individual instrument risk and yet still ideally get the most out of your strategy.

[umfan92 10]

This is all so confusing. I'm trying to learn but I honestly don't have a clue where to start. I read many articles and I just recently got a couple books, but I still don't think I'm doing it right.

[Pony 10]

I don't think of it as much as a phenomenon. I was watching this stock for a while, and I was 100% sure that it was going down, (I was swing trading, not day trading), so I went short. I woke up and updated my stock list on my phone. All my stocks were up (even the ones I was long in, so I didn't really loose anything that day.) Then I wanted to find out why, so I typed this in google, "Why did stocks go up today" and it said economy is doing better than economists predicted (in not so many words). All stocks are connected. The internet bubble is pretty famous. Were those stocks worth that much? Not most of them, maybe not any of them, but people felt good and that makes them buy. When people see the majors like Dow, etc. go up, they feel good and buy other stocks they've been watching. At least that's my theory.

[MadMarketScientist 11]

This is all so confusing. I'm trying to learn but I honestly don't have a clue where to start. I read many articles and I just recently got a couple books, but I still don't think I'm doing it right.

 

Yes the learning to trade the markets can be confusing. I would recommend sitting down, WITHOUT a computer, and just write down what you want to achieve. And then break it down into small tasks that can be done in a day or two. Information overload is a serious problem in this day and age of the internet and I am convinced it can sometimes be a time-suck! See this thread ... http://www.traderslaboratory.com/forums/technical-analysis/9858-information-overload.html?highlight=information+overload

 

MMS

[SIUYA 11]

Also when it comes to learning - for the time being put away what the daily papers tell you....they will only serve to confuse more. Once you have formed enough of your own ideas, then the headlines might be worth reading again.

[henryduncan12 10]

This is all so confusing. I'm trying to learn but I honestly don't have a clue where to start. I read many articles and I just recently got a couple books, but I still don't think I'm doing it right.

 

You are going right. keep reading various article try to learn basic transactions. I think demo accounts can help you. It provides you the facility of demo account. Otherwise ask any reliable person that if he/she can teach you basics.

[mslk 10]

i would suggest limiting the scope of your research into something manageable. its very easy to get overwhelmed with all the info out there. think about this, if you watch trades on trading floors (on tv, on the web, or even in person), you'll see that they tend to trade the same stocks or instruments daily. they don't necessarily search for something new everyday.. as an example, find 10 symbols and do all the fundamental and technical research on them all. then pick two 'peers' for each stock based on sector and industry groups. line up all major variables - things like price-to-book, price\earnings, etc; do a layover chart and see how their picks stack up against the peers. then add the market indexes (djia, sp500, etc) to the layover and see how they fare against the entire market.

 

this should help you determine which symbols you want to trade - without getting overwhelmed. i only trade 12 or so stocks\options

 

good luck!

- mslk

[henryduncan12 10]

Also when it comes to learning - for the time being put away what the daily papers tell you....they will only serve to confuse more. Once you have formed enough of your own ideas, then the headlines might be worth reading again.

 

Yes and enough ideas can be formed by collecting updates regarding forex news, and other forex updates like various software, rules, etc.

[Josh7 10]

This is all so confusing. I'm trying to learn but I honestly don't have a clue where to start. I read many articles and I just recently got a couple books, but I still don't think I'm doing it right.

 

I have been going through the same ordeal and I am still learning. I was reading different books that focused on the various ways to analyze a stock/market. Some people use fundamental analysis(looking at the balance sheet, cash flow etc. of a company), use technical analysis(to see trends in a stock) and others:boxing:. Then there are also strategies involved. The way that I have found useful is by asking questions and engaging in conversation with more experienced investors. There seem to be plenty of them on here who know a great deal. Once you fully understand it then you can create and share your own strategies which you feel comfortable utilizing.

 

Any question can get you started just look through some of the topics. I learned about bollinger bands a few months back just by asking someone "Do you think CREE will maintain the current trend?":question:

 

If you dont know any terms people say you can just look them up:

 

Investopedia.com Tutorials: Building Blocks and the Basics of Investing

 

Hopefully this helped you.:cinema: