Stock Prices Falling,Is Your Trading Destroying Your Capital, Reasons Most Traders Don’t Make Money

Is the Stock Prices Falling Is Perfectly Normal?

Falling stock prices are entirely natural in the market. Pullbacks are not rare or cause for concern in the stock market unless they precipitate a potential bear market. Is the Stock Prices Falling Is Perfectly Normal?

Parameters for stock market declines:

  • A correction of -5 percent is a pullback.
  • An adjustment of – 10% is normal.
  • A decline of -20% constitutes an official bear market.
  • On a chart, a decline of -50 percent is a crash.

The following are some of the events that occur during routine stock market price swings:

  1. Corrections are a common occurrence in uptrends on the majority of charts.
  2. Even during a stock uptrend, prices will frequently revert to the 50-day moving average.
  3. On a normal basis, stock index ETFs will reverse near 70 RSI and fall back to 50 RSI.
  4. Bull markets will frequently revert to the 200-day moving average.
  5. Profit-taking causes prices to tumble to all-time highs.
  6. Downtrends are initiated when stop losses are triggered.
  7. When investors on the sidelines either stop purchasing or begin selling in large quantities, either of these events can result in a decline.
  8. Accumulation cycles propel prices upward until risk/reward ratios become unfavorable.
  9. When the market has absorbed all available supply down to a support level, the chart will cease falling.
  10. Fear is the primary driver of market corrections. It can be sparked by pessimistic headlines.
  11. Trees do not grow to the sky, and bull markets do not continue to set new all-time highs without any pullbacks.

Conclusion

How to Use Emotions in Trading As An Advantage

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