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Technically speaking, trend is your friend. For an investment instrument as volatile as stocks, is it still possible to predict how stock prices will move at a given time?
Veteran market pundits say this is very much in play, stressing that there is science behind the controlled chaos that is the stock market.
During the TradeTalks Tutorial Series hosted by BDO Securities on the basics of technical analysis and understanding market trends titled "Trending Patterns", BDO Securities Chief Operating Officer, Bernhard Tsai, said market prices form patterns that create trends, and people almost always tend to react the same way when they see the patterns that had similarly formed in the past.
But a more viable game plan, however, is to identify the type of trends that are formed, and riding on them until such trend is reversed.
"Trends are confirmed by presence of volume. Volume has to be present so you'll know there's a demand for this stock," Tsai said.
“Human psychology plays a key role in the stock market," he added. "Whether it's positive or negative news, the market discounts everything. As long as it's already public information, it's already reflected in the (share) price."
How can novice market investors find a good entry in buying stocks using technical analysis? Tsai advised to buy at the breakout point. A breakout refers to the price of a stock when it moves above a resistance area. Breakouts indicate the potential for the share price to start trending in an upward direction.
"One of the common pitfalls for investors is they don't have a good exit strategy," Tsai said. "When things go right, we tend to be too greedy and don't know when to get out. Knowing how to identify patterns to buy is as good as knowing when to exit."
To know the tips on how to have a good exit strategy, identifying market trends, and appreciating the advantages of having a sound technical analysis, Tsai advised first-time investors to open an account with BDO Securities and take advantage of the different technical analysis-based resources such as the Technically Speaking commentaries and tutorial videos.
About BDO Securities
BDO Securities is a full-service, multi-product brokerage firm, and a wholly-owned subsidiary of BDO Unibank’s investment banking arm BDO Capital & Investment Corporation.
It posted a 3-year CAGR of 38.68% in terms of total trade volume, and 25.52% in total client base, strengthening its position as among the top trading participants in the Philippine Stock Exchange (PSE).
Its objective is to empower its customers with access to best-in-class products and services, timely and relevant investment research and market insights that will help them make informed decisions on their trading and investment needs.
About BDO Unibank, Inc.
BDO is a full-service universal bank which provides a wide range of corporate and retail services such as traditional loan and deposit products, treasury, trust banking, investment banking, private banking, rural banking, cash management, leasing and finance, remittance, insurance, cash cards, credit cards, and online and non-online brokerage services.
BDO has the country’s largest distribution network, with over 1,600 consolidated operating branches and more than 4,600 ATMs nationwide. It also has 16 international offices (including full-service branches in Hong Kong and Singapore) in Asia, Europe, North America and the Middle East.
The Bank also offers digital banking solutions to make banking easier, faster, and more secure for its clients.
BDO ranked as the largest bank in terms of total assets, loans, deposits and trust funds under management based on published statements of condition as of December 31, 2022. For more information, please visit www.bdo.com.ph.
BDO is regulated by the Bangko Sentral ng Pilipinas with contact number (+632) 8708-7087 and with email address firstname.lastname@example.org, and webchat at www.bsp.gov.ph.
For concerns, please visit any BDO branch nearest you, or contact us thru our 24x7 hotline (+632) 8631-8000 or email us via email@example.com.
BDO Unibank, Inc.
BDO Tower Valero
8741 Paseo de Roxas, Salcedo Village
Makati City 1226, Philippines.
Tel +63(2) 8840-7000
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ABOUT THE BLOGGER
Hi, I'm Ralph Gregore Masalihit!
An RFP Graduate (Registered Financial Planner Institute - Philippines).
A Personal Finance Advocate. An I.T. by Profession. An Investor. Business Minded. An Introvert. A Photography Enthusiast. A Travel and Personal Finance Blogger (Lakbay Diwa and Kuripot Pinoy).
Currently, I'm working my way toward time and financial freedom.