Candlestick Trading Blog

---

As I said, you will find that the amount of work you have to do will likely increase during less favorable periods such as high stock volatility, but volatility itself doesn’t eliminate the possibility of finding good deals in the stock market. There are a number of different market conditions that can have an effect, so let’s discuss a few of them.

Bull and Bear Markets
When the market is on a consistent trend, whether upward or downward, it can seem easier to buy stock. As opposed to an unstable market, movements in trending markets are more readily identifiable and the signals are clearer. Many investors have “invented” forecast models for trading and they usually work very well in markets like these where investment timing seems to be more a product of maximizing your profit than trying to find a suitable purchase.

This is not to say that investment risk disappears in a trending market. In fact, this can be a very dangerous time for an undisciplined trader. Because investing feels “easier” in trending markets, an investor is more tempted to buy stock without following his or her technical analysis. This is always a dangerous situation.

Volatie Markets
A volatile market is not unlike what has been happening recently.Wall Street news is consumed every day with the grim report. Trading started way up for the day but finished with a triple-digit loss....or maybe the news said that stocks rallied after being down most of the day. Stories like these have become regular fare, but even these periods shouldn’t scare off investors. It is possible to buy stock during these periods and actually those who are involved in day trading relish days where there are big swings in the market. This morning’s lows can become this afternoon’s highs and investors who pay attention and buy stock on these changes can see some very good profits.

The key to successful trading during this time is....you guessed it....being faithful to your research. Charting can be a great help and many investors use complex statistical models to continue looking for trends. One example of this is to follow moving averages and to buy stock based on these chart formations. Moving averages are helpful in smoothing out charts that appear to be unreadable based on the instability.