Trading is interesting for a reason that it is not predictable. Considering the demography of billions of people involved in it and considering the diversity among those billions of people, the behaviour of stock market is almost always unpredictable. Writing an Algorithm to predict stock market would probably require mapping the neural networks of billions of people involved in trading in stock market. And the food news is neural networks always change and especially their connections which means that ideally we should be safe with trade market if it's left as it is and as genuine as it is and was.
Many people on trading need money and for many trading could be a source of income. Basic rule that they follow or I am tempted or tend to follow is buy when the shares are cheap and sell when they are expensive. When a trader online sees a stock price going down, he bids for buying shares of the stock 'X' which is cheaper. After he bids, the auction begins at stock exchange and many traders bid. The bid price of traders is generally different as every trader, his thoughts and strategies in Investments are different. So, finally the action at stock exchange happens and some trader wins the bid for shares of the stock. Now since the demand for the shares of the stock is more, naturally the shares of the stock 'X' would have been sold at a higher price than the cheaper price that the trader wanted to buy. Therefore the market price of the shares rise because of the demand for them in stock exchange and the higher bid amount that the stock gets because of the trader that bids higher price in buying the stock.
Now when the stock price goes high some traders tend to sell the shares of the stock which is at higher price in the market now. This gets some profits to the traders as they could have bought it for lower stock price.
Once the traders sell their shares of the stock, the price of the stock goes down again following the behaviour of stock market.
When it goes down again, the traders would bid for buying the shares as it has gone down. And the stick price increases again as the demand has risen for the stock and other traders would probably have bid for higher price for buying the stock increasing the overall market price of the stock which is computed based on all the values of the shares of the stock that it is bought at.
Considering the natural behaviour of the demography the behaviour of stock market is always a zig-zaggy dominant behaviour and I think it's best to leave it like that. Experimentation can be made on a beta stock exchange platform so that it doesn't affect the original trading of the country or globe.
Cheers,
Yaswanth Raja Akaveeti,
Computer Architect and Software Architect,
Comments