6 Tips to Stay on Track with the Stock Market

Source: Pixabay

How to Track the Stock Market and Be on Top of It

You can look to leverage several tools and technologies to track the stock market and benefit from its underlying volatility.

The stock markets can be highly rewarding, only if one knows how to identify the market trends and important macroeconomic and geopolitical developments. However, the dynamic nature of stock markets makes it a high-risk asset class and is daunting to novice investors.

However, the shift towards remote work structures has encouraged people to take an active interest in equity investments during their free time, leading to a substantial rise in reported trading volumes across major exchanges globally. Moreover, the ongoing bull run precipitated by the V-shaped macroeconomic recovery makes it an ideal time for beginners to trade.

Given the significantly high-risk exposure, investors can vet the market trends in the following ways to safeguard their portfolios and maximize returns.

Remain updated with the latest market news

Tracking the latest events domestically and on a global level is vital for becoming a profitable trader. Given the highly sensitive market responses and analyzing the potential implications of news should help investors identify the perfect entry points, as well as ascertain the adequate time frame for holding a particular stock.

For example, Plus500’s News and Market Insights outlet is a highly accredited news source covering the global markets, providing detailed insights to both investors and traders. Following such news platforms will help you better analyze the stock market and identify companies that may generate outsized returns consistently.

Track macroeconomic parameters

Real-time macroeconomic data have substantial influence over the stock markets, as they affect the business operations of virtually every company and affect the aggregate demand and supply levels in countries. For example, the robust vaccination drive in the United States and faster-than-expected broader economic recovery has resulted in a steep rise in treasury yields, in turn, causing tech stocks to slump over the past couple of months. However, given the rapid integration of tech in virtually all sectors and the industry’s growth potential, the ongoing market correction might be the best time to invest in these growth stocks.

Make use of technology (Apps)

A majority of brokerage firms and financial websites have developed personalized apps in this digital age. Accessible through most electronic gadgets, these applications can help part-time traders keep track of the recent developments without interfering with their day jobs.

Such apps can help investors track the latest developments in the market. Additionally, they can also view the broader market’s reaction to such an event, allowing them to gain perspective on the implications of certain news.

For example, earlier in April, an impressive job growth report and rising consumer spending, as tracked by the CPI, propelled Dow Jones Industrial Average (DJIA) to hit its all-time high of 34,035.99. Easy access to such market-moving news and the real-time price fluctuations of benchmark indexes and blue-chip stocks should help beginners to decode the workings of the stock markets.

Sign-up for automatic alerts

Financial and investment journals usually provide instant notification services to readers. Also, renowned websites often publish daily or weekly newsletters, providing readers with a summarized description of the most important market developments.

Such instant email notification services offered free of cost can be helpful for investors to keep track of the recent market news instantly, giving them the opportunity to buy or sell securities accordingly. Given the highly time-sensitive market responses, immediate notifications should allow them to derive substantial profits from their trades.

Use portfolio trackers

Portfolio trackers help investors select the best stocks to invest in given their goals and preferred risk-return exposure. With more than 3,000 stocks trading in the United States exchanges alone, choosing the ideal stock can be a challenging task, particularly for beginners. Portfolio trackers are designed to shortlist potential candidates, based on pre-set parameters.

For example, investors who plan on investing in undervalued stocks with a huge momentum for growth can select limits on various valuation metrics such as Price-to-Earnings and Price-to-Sales ratios. For the growth aspect, investors can preset limits on earnings and revenue margins and consensus estimates through portfolio trackers to filter out the best possible stocks.

Look out for institutional trades

Following the footsteps of popular industry gurus can be immensely helpful. Their decades of experience and extensive market knowledge allow them to bet on the biggest gainers in the future, irrespective of the stock’s performance in the current periods. To illustrate with an example, renowned investor Cathie Wood began betting on electric vehicle stock Tesla, Inc. back in 2019, when most of the investors were heavily shorting the stock. A year later, Wood’s bet on TSLA stock made her investment firm one of the most profitable companies. However, before following such investment gurus, beginners should ensure that their goals and objectives for trading are aligned with respective moguls.

Conclusion

Many people consider stock market investments to be immensely formidable, holding them back from utilizing their savings in fear of losses. However, many companies and services have been developed over the years to make stock trading beginner-friendly. As retail investments continue to gain traction, novice investors should try following the above-mentioned steps to keep up with the fast-changing industry.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes