Use level II quotes to assess whether any large investors are affecting the price movement of the stock. Level II quotes provide a list of every bid and ask price of a stock, moreover to who is placing the order. The bid is the price at which a trader is offering to buying a security. The "ask" is the price at which a trader is offering to sell the security.
It is crucial to be accomplished when analysing inventory trading. Many factors contribute to how securities act, including firm dispatch, marketing hype, inventory manipulation, and the trading life of big investors.
Instructions
1. Assess the tome of the inventory to assess the distinction of the factors that competence it. Publication is the numeral of shares traded in a apt period. Many free stock chart websites such as Yahoo Finance provide information regarding the average volume per day of stocks. Compare the three-month average with the current volume traded to evaluate the strength of the factors influencing price movement. If the volume is significantly higher than the average daily trading volume, then the security more than likely will continue to move in a similar direction.
2. Evaluate whether hype is affecting the current price movement by reading online message boards used by investors. Search Google for "stock trading forum" for message boards in which investors discuss the movement of securities. Read every post and separate fact from fiction. For instance, if one user posts information that Company A is going to sign a contract with a large corporation--yet there is no independent news of such a deal--the post is likely a mere rumor. If there are multiple users discussing these rumors, the affect is stronger and may even cause the security to continue to rise or fall, until the rumor either is debunked or validated by the company.
3. Analyze recent press releases of the company. Determine how strong the recent company filing affects the intrinsic value of the stock. If the company has significantly better quarterly earnings than last quarter, the stock more than likely is going to continue to rise. Nevertheless if the company's earnings are significantly worse than the previous quarter, the stock probably is going to continue to gradually fall. Other news such as an office expansion or company meeting rarely affects the movement of a security.
4.Be trained the properly anaylze inventory trading.Analysing inventory trading is can be challenging thanks to the inventory bazaar is in fixed flux. Price-movement patterns may disappear or convert within days, however maybe not for months or dotage. Level II quotes are used to evaluate future price barriers. For instance, if a certain trader is offering to buy 50,000 shares of a company at $5, then the security is going to increase when it reaches near $5.
