Financial markets are the most complex and unpredictable trading which is happening all over the world. Financial markets include shares, securities, valuable metals, derivatives and more. This is the place where most of the buying and selling happens. This is also used by many companies for raising their capital and hence expanding their line of business.
Smart Money
A trend can be termed as a pattern. Trends usually have a desired direction at a desired time. Financial markets also have their own form of variation and this is called as financial market trend. Though these markets are highly unpredictable, experts have done intensive investment analysis and have come up with various facts from the past history.
Basically, market trends are classified into three types based on the time frame involved. They are: Secular trends, which are used for long time frames, primary trends – used for medium time frames and secondary trends for short time frames. Trending helps traders very much in multiplying their profits. But, this requires lots of technical and fundamental analysis. A framework should be designed based on market trend which should predict the price taking into various other factors like time and economy.
Money Sense
In financial market, two words namely bull market and bear market are commonly used. Bull market refers to the market where investors invest with confidence and the price of the shares continues to increase. Bear market refers to the market where there is a price decrease for over a certain time interval. In this market, investors have fear and the confidence level decreases pessimistically. In simple words, bull market means upward trend and a bear market means downward trend.
Secular Trends:
This type of trends can happen over a long time which could be somewhere between 5 and 25 years. A secular bull market means the financial market is growing upwards at that particular time period. The time period between 1983 and 2000 can be termed as a secular bull market for United States.
Similarly, Secular Bear Markets means the financial market is moving downwards at that particular time period. Gold market had a secular bear behavior from 1980 to 1999. Gold markets have invariably been the most consistent and secure form of investment. Gold prices are currently at record levels, so it is a good time to sell broken gold. Gold markets have seen steady growth and not too many significant fluctuations in comparison with the stock markets around the world.
Primary Trends:
This type of trend takes place for one year or so. It involves broad support for the whole market. Like secular trend this market also has primary bull and primary bear based on the growth or downfall of the financial market at that time period.
Secondary Trends:
Here, the duration is very low. It could be a few weeks or a few months. Market correction is one of the secondary trend markets. Market correction in a financial market means a decrease of 5 to 20% in the price. Bear market rally is another type of secondary trend. This refers to markets which have price rise of about 10 to 20 %. Dow Jones share had this behavior during 1920’s.
Though there are many expert comments on financial market trending, the general feeling among people is that these are inconsistent and the price movements are very unpredictable.
