How to Find Trending Stocks

Trading in the stock market can be an extremely lucrative occupation with the right tools, resources, and knowledge. The most profitable way to trade stocks is to identify current market trends and be amongst the first investors to capitalize on these trends while they are still highly profitable. In fact, this very strategy has earned countless stock traders hundreds of thousands of dollars in just a couple of weeks, and every month someone earns a hefty fortune by identifying trending stocks. Learning how to find trending stocks is a science that often needs to be researched and practiced for months, if not years, before it can be even somewhat perfected. Identifying trends within the stock market is so important that traders have coined the term “the trend is your friend”. Luckily, with the right techniques and a bit of persistence it is fairly easy to identify trends, although it is always challenging to determine which trends will be the most profitable.

Utilizing the 200 Day Moving Average to Find Trending Stocks
The first step in finding trending stocks is to monitor market activity, news releases, and social discussions to discover which products and companies are quickly becoming popular. After you’ve narrowed your list of prospective stocks that could potentially be trending, it is best to check the 200 day moving average for each stock. This statistic allows you to determine whether or not it would be profitable to purchase a stock based on the current market trend for the company. If a stock is currently trading above their 200 day moving average, then it would be wise to purchase it, however if it is trading below the 200 day moving average, then it may be wise to use the stock for shortselling (capitalizing on the drop of the stock value).

Understanding Chart Slopes and Stock Trends
It is also important to understand time frames and chart slopes, and how they affect stock trends. This is relatively easy to do, as you’ll simply need to determine the desired trading timeframe and then utilize data gathered from a chart that monitors the very next timeframe. In other words, if you wish to trade with the weekly chart, then you should utilize the monthly chart data to find out whether or not the stock is trending. To do this you’ll need to find the stocks lowest value in recent history, based on the type of chart you are using. For example, traders that utilize the daily chart to analyze trends should examine the past three weeks of trend data, while traders that utilize the weekly chart to analyze trends should examine the past three months of data. After doing this, draw a line from the stock’s lowest historical value to stock’s highest value. This line will give you an indication of whether or not the stock is in a down or up trend.

Using Charting Tools to Identify Trending Stocks
Of course, if you are not extremely proficient with charts, or you are unable to find the necessary charts needed to find trending stocks, then you may want to use an automated charting tool/service like MarketWatch to determine whether a stock is in a down or up trend. The simplest way to do this would be to find and select either the ‘ above 200 day moving average (DMA)’ option or the ‘below 200 day moving average (DMA)’ option within the charting tool interface. To find a stock that is trending upwards select the first option, and to find a stock that is trending downwards select the latter option. Once you use the charting tool to find which stocks are trending, you can determine which one might be the most profitable using the aforementioned chart slope method.

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