For more information about the different stock market indicators mentioned in this guide, we suggest reading our guide on the best indicators for stock market trading.
If this is your first time using the indicators in our free investment tool, we recommend you to read through the following questions so you can get familiar with these symbols and indicators.
Can stock indicators be used to predict any future events?
It’s no secret that the different stocks listed on the stock market are all subject to the price movements of all the other stocks within that same business.
For example, if McDonald’s were to move down in value (a negative trend) then others in the industry should be unable to keep up, which will ultimately hurt consumers of the companies themselves.
However, it’s the ability of stocks to move in concert with other key sectors of a different market – in this case, a broad-based economic activity – which is a different matter.
Does the stock market provide reliable information on current market conditions?
Some indicators can provide a good indication of how a market is doing, but it all depends on the market participants in question.
For example, a rise in the price of the dollar against a basket of currencies can mean that this is a good indicator of inflation, but the same would not be true if the price of the US dollar fell against the currencies of the other major markets which also contain the US dollar.
Furthermore, certain stock market indices offer information relating to the prices of particular goods and services – but not necessarily which ones are currently in the consumer economy.
So you shouldn’t necessarily rely on the dollar trend (or in particular, the price of a particular currency) as proof that the current level of inflation is justified.
Is the stock market a reliable place to buy and sell investments?
Stocks are not a good choice for initial investment
Although the market is often hailed as the best investment vehicle out there, there are numerous cases where it’s unlikely to deliver the type of returns you require.
It’s this that means it won’t be the first place you take money when investing in a new business venture or when planning your retirement savings.
Investors looking to buy into emerging markets need to think of them as an investment that could be a great investment to make, but it’s not the first place stock market analysts will look when conducting research.
For this reason, these indicators come with a higher initial cost than more stable sectors