Your success as a stock trader depends on your ability to correctly identify trending stocks and appropriately respond to fluctuations based on data that portrays either an uptrend or downtrend. But how do you go about identifying profitable trends to engage with in the first place?
The likelihood of you identifying favorable stock patterns is dependent on your dedication to research (and knowing where and how to conduct that research). To sharpen your skill in finding trends that will maximize your profits, use the guide below.
Researching Stock Trends Online
Ideally, as an investor, you would be able to mine existing data on the stock market and study the behavior of the trend over an extended period.
Such information would clue you into the patterns of that stock’s industry, enabling you to make thoroughly-informed decisions on when it would be best to enter or exit a market.
There are millions of financial analysts online that compile data on specific industries or trending stocks.
For example, you can find today’s top trending stocks online on websites such as Follow the Money.
Data compilations such as this are indescribably advantageous to you as a stock trader, especially since the stock market is in a continuous state of flux.
Trends can appear one day and be gone the next, so you must perfect your research techniques to pinpoint them in time to take action that will yield a substantial profit.
Stock market and investment publications are widely available online, and they often depict information for stocks that are experiencing annual highs or lows.
(This is where you want to identify what types of trends you are looking for. The nature of your research will depend on whether you approach the market as a bullish or bearish investor. Each style will influence whether you should be focusing on uptrends or downtrends.)
The stock price shown in these online market data resources can indicate the overall trajectory of a given trend.
Define your profit goals and trading style first, before diving into in-depth research.
This way, you won’t waste your time searching for data that will, ultimately, fail to inform you of the best emerging trading opportunities.
How to Research Stocks Online with the Bottom-Up Method
Once you locate a reliable source of relevant stock market data, and you observe the provided trends, take note of the 52-week highs and lows.
If the price reflected in the data is the annual high point of that stock, then you can safely assume that the stock is experiencing an uptrend.
However, if the price is low, this may be indicative of a downtrend. By using these resources, you can select which stocks to follow and research individually.
This is known as the bottom-up method for identifying trending stocks. Follow the instructions below to proceed with the bottom-up approach:
- Observe your chosen stock’s historical data. When doing so, you can choose to display the data in short or long timeframes. Typically, the shortest timeframe available is six months; however, you can extend the observation period up to one or three years. The information will be provided as a graphic, usually a linear or bar graph, illustrating clear patterns of either rising or falling stock prices.
- Note: The top trending stocks listed on Follow the Money are depicted in a six-month timeframe. This is great for identifying the most current, relevant information for entering (or exiting) a market, especially for those looking for existing uptrends to take advantage of.
- Take note of the stock movements over time. Specifically, you want to note whether the trend is falling or rising consistently. (You can expect to see several up and down movements at various periods of the trends’ history, but you want to look for the overall trajectory.) If the majority of the stock’s movements are rising, then you can determine that the stock is on an uptrend. On the other hand, if the general direction of the stock is downward, then the prices are falling, and the stock is trending down.
This method of researching stock trends is entirely independent, although you can certainly seek guidance in drawing conclusions from the provided data.
How to Find Trending Stocks Using the Top-Down Method
This research approach may be best for individuals who are new to stock trading since you can choose to either pay for a formal research service or use free research tools that are available online.
If you opt to pay for a research service, you will have access to cutting-edge software that can reliably detect trending securities. With this technology, you can refine your search by inputting specific criteria for the stocks or industries you’re interested in.
Otherwise, the software will display trending stocks according to a preset algorithm or learned information about you.
With this method, it’s best to view the available data on the industry scale, rather than individual stocks.
This way, you can see that industry’s history in the stock market and select specific companies in which you wish to invest.
From there, you can narrow your search to individual securities and choose your stock trading strategy based on both the large and small-scale data.
There are similar technological options for research and trending stock alerts via Follow the Money’s membership plans. You will have access to a long list of features, including:
- Market Trakker: This feature will notify members of trends in the U.S. stock market.
- Trading research tools: Members will have access to tools that allow them to analyze several levels of the stock market, from individual industry to the entire country.
- Buy and sell signals: Get alerts that inform you of what actions you should take, given a stock’s current status.
- Trading ideas: Need some guidance on how to proceed in a given industry? Follow the Money will send out one trading idea per night to improve your performance.
There are numerous ways to gather information on trending stocks online. To streamline your process, become a member of Follow the Money, where you’ll have access to the latest data and innovative tools to maximize your profits, regardless of your trading style.