Sunday, September 11, 2011

Understand Market Trend Before You Trade - NASDAQ and KLCI

If you have no idea what is stock at all, I suggest you read the following first: Stock Market 101: Understand How Stocks Get Started.

To be successful in stock investing, the first thing that you want to do is to analyze the entire stock market as whole and learn how the majority investors behave in the stock market. The stock market index is the indicator to tell you how the market moves. It represent everyone present in the market place. :D

I personally invest in US stock and Malaysia stock market. So 2 stock market indices that I"m interested are Nasdaq Composite Index and KLCI.. The following charts show the 1 year histrory trend.

KLCI - FTSE Bursa Malaysia Large 30 Index

KLCI comprises of 30 largest companies in Malaysia with approximately 70% of the total market capitalization of the FTSE Bursa Malaysia 100 Index.

Nasdaq Composite Index

Nasdaq Composite Index comprise of over 4000 innovative and fast growing technology companies in United States of America.

Note: What I like about this chart is when you click on it, it shows you the technical analysis of the chart. You can then perform the "Technical Analysis" on those chart. Basically technical analysis helps you to make investment decisions based on the study of charts rather than the stock fundamental. Interesting isn't it? But this is still something new to me but I will share with you more later on once I"m familiar with it. :)

What I don't like about this chart is only able to display up to 1 year trend. To view more than 1 year trend, you will have to use Yahoo Finance.  But Yahoo doesn't have a way to embed the stock chart in a website or blog.If you know, feel free to share with me.

P/S: What about you? There are lot of stock market indices out there. Which market index do you refer?


Kris said...

One thing about US stock market is that it is hard to find buy/sell information that you can easily find in Malaysian stock market.

Anyone knows??

Buy as in buying up, and sell as in selling down.

ChampDog said...

Oh really? I once heard an investor mentioned that Malaysian stock market is unpredictable because most stocks do not based on fundamental. Speculation instead... Unlike in US, most stocks are supported by fundamental.

Could this be a reason why it is easy to find buy/sell information in Malaysia than in US?

Kris said...

US also don't really based on fundamentals. There is alot of algorithmic trading aka High Frequency trading or machine trading. Just look at the option bid/sell prices, the queues move so fast up and down without anyone buying or selling.

ChampDog said...

Something new to me - algorithmic trading. Machine now also can trade? That's pretty cool. Is that an AI?

I get this from wikipedia:

"In the U.S., high-frequency trading firms represent 2% of the approximately 20,000 firms operating today, but account for 73% of all equity orders volume."

This is pretty scary...

kampunginvestor said...

I use to trade using my feelings! Haha.. It turned about sour! lolx!

Now i trade using fundamentals. Anyway there is always good fundamental stocks all over the world. ;) Whether it is US or Malaysia i am sure there is some GEMS around! ;)

ChampDog said...

Unless your feeling is also the majority of the investor feeling, then that is good. :)

Yes, fundamental always works especially when it goes to long term. However when the market crashes badly, the long term here could be > 10 years or even more.

kampunginvestor said...

Don't think will take that long la brother if market crash. 10 years is hell lot of a time.

I think if market crash, after 3 years should be up again. Just my 2 cents.

When market crash, how fundamental your stock is, it will drop also but if it is fundamental it will rise again when the time comes! ^^

ChampDog said...

It depends. My US stock price at USD100 in year 2000 and has never been recovered until today. Not even close to USD100.

What do you say about that? :) Hahahah....

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