Trending stocks are those types of stocks that have high trade volume. They tend to fluctuate constantly and brimming with opportunity.
There are many things to know about trending stocks. So, if you are an investor and aim at choosing trending stocks in Canada, this is the right article for you.
Let’s get started:
Reading Stock Trends
When talking about reading stock trends, it’s about moving averages. The reason these stocks are referred to as such is that they continuously change with time.
In the market, there are three different types of stock trends: up, down, and sideways.
Downtrends are the types of trends that are bearish, which means the stock price is heading down. Uptrends, on the other hand, are bullish types of stocks, which means these stocks are on the upswing. Lastly, sideways trends are stocks that are neither on the up nor the down. The prices of these stocks remain the same over time.
Trending stocks will not move in a straight line, but to have a clear picture of their behavior, you can plot the moving average. On top of trending stocks, there is support and resistance. These stocks are also referred to as floors and ceilings.
For a resistance trend line, it will follow an upward trend, leading to a price, it will be hard for a stock to break through and above. Support trend lines will happen after the price of the stock is at a downturn.
Finding Trending Stocks
- Increase In Trade Volume
A higher trade volume accompanies these trending stocks. So, getting to know the stocks that have high trades in a day helps you find trending stocks. That’s because they are stocks that garner a lot of attention. A sudden change in volume helps identify negative or positive trends.
- Following The News
No business operates in a vacuum. So, to find trending stocks, pay attention to things happening in the world. For example, when a technology company will release a new gadget, it shows that investors will be watching the stock closely.
- High Volatility
Trending stocks will have a high price variance. So, look at the stocks that have huge jumps on each day. If you can catch the price set on a specific stock on a downswing, you can sell on an upswing, thus more profit.
Technical Analysis of Trending Stocks
The crux of the technical analysis of trending stocks is that past performance will indicate future performance. In other words, it means that a company performing well has to continue doing well when all things are equal. Therefore, performance will be evaluated depending on charts or other tools, providing an insight into the company’s future.
On the other hand, technical analysis doesn’t care about the intrinsic value of businesses, as that is often subjective. Instead, technical analysis will look for patterns such as price movement.
The Bottom Line
It is hard to know that your next pick will be a strong stock. However, with new improvements expected within the year, ensure you have the best stocks.