Stock Market trend today – Stocks and Main Securities prices. In this simple guide, we will explain how to interpret stock market trends, how to read stock prices and stock indices prices to make investments in the stock exchange and stock markets. But let’s proceed in order.
Interpreting Stock Market trend
Interpreting the stock market trend and getting your bearings is certainly not easy, especially if you are not very familiar with it.
The first basic element, which every trader must know, is the opening and closing price of the individual stocks listed alongside the data on the opening price of the session, as well as the current price, the maximums and minimums for the last 12 months.
Another very important feature to always keep in mind is the fact that all the smaller capitalization stocks are more volatile; financial securities, which are generally more exposed to sudden price hikes, also fall within this circle.
To correctly read the trend of the stock market, one must keep in mind:
- bid price;
- ask price.
These indicate the values at which investors willing to buy and sell can be found. To examine this data, you can do it through the Book, next to the title display. The point of intersection between bid and ask is equivalent to the transaction. They are very important to avoid making rash choices.
Also, you should keep under close observation the value of market multiples, such as price earning (P / E on the summary page), which represents the amount of net profits deriving from a company divided by the number of existing ordinary shares. The result that is obtained is exactly the profitability of the company. In this case, we must consider that:
- if the relationship expresses a contained value compared to that of the competitors, then the company has greater possibilities of revaluation;
- if the relationship is contrary, there is a risk of an over-evaluation.
Another fundamental aspect in reading a stock market chart is the volume, which indicates the number of pieces exchanged for each security. Usually the data is not considered alone, but the comparison between the volume and the average of the last 6 months maximum is taken into consideration.
How to read the trend of the indices
The term Stock Market index refers to a set of shares relating to a specific sector and a certain stock exchange. In other words, stock indices represent a basket of stocks: therefore the performance of a stock index depends on the performance of all the stocks that make it up.
All stock indices are calculated on the basis of the weight of each stock that makes it up through 3 different systems:
- all indices are listed with the same weight;
- each stock has a certain weight based on its price;
- each stock has a weight calculated on the basis of market capitalization.
The most important parameters to verify when examining stock index charts are:
- maximum value;
- minimum value;
- current value;
- value at the opening of the stock exchange;
- change in the index in the last 24 hours.
How to read the quotations of the stocks
To interpret the quotations of the stock market shares in the best way, it is enough to be able to interpret all the parameters available in the price list of the currency market:
- official price, calculated on the basis of the average daily prices based on volumes;
- capitalization: with reference to a company, it represents the product between the number of shares in circulation and their unit price; with reference to a market, it represents the total value – at market prices – of all listed stocks;
- percentage on the total, which indicates the weight expressed as a percentage (%) that a stock has on the total market capitalization.
Practical procedure for reading stocks prices
Given the above, let’s examine a practical case.
As we can see in the image above, in the upper part we find, in addition to the index of our interest, also the primary and secondary price and all the other elements described in the previous paragraphs.
The stock symbols are nothing more than a series of letters that act as an abbreviation for the names of the companies. They may coincide with the company name or may also not coincide. In fact, it often happens that many companies, next to the symbol, also list their name in order to facilitate their recognition task.
Another important aspect is the live ticker, that is a teleprinter tape, which flows in the bottom providing basic information of the stocks as shown in the image below.
To read the quotations on the stock exchange, there are some very important terms regarding stock information that you need to keep in mind:
- Close / Current Price: indicates the price at the end of a day on the stock exchange.
- 52W high / low: represents the extent of the shares concerning the last year from the lowest to the highest price.
- Div: or dividends paid per share.
- % Yield: represents the percentage of return dividends compared to the share price.
- EPS: represents earnings per share.
- P / E: Price / earnings ratio.
- Vol: represents the volume, or the number of shares traded on the previous day.
- High / Low: it is the highest market price compared to the lowest market price of the previous day.
- Net chg: change of the closing price of the previous day.
- Shares: it is the quantity of shares held by an investor.
- Mkt cap: represents the total value of a company in the market.