“Why does my stock drop right after I buy?” “How do I know when to buy or sell?” These questions haunt almost every beginner. Don’t worry! Today we’ll use the simplest analogies to help you upgrade from “just watching” to “understanding the game.” Even a market vendor can grasp these price movement methods—let’s decode them now!
How to Read Stock Movements?
The stock price is essentially a tug-of-war between buyers and sellers. Imagine vegetable prices at a market:
- When aunties rush to buy: more buyers, vendors raise prices → stock price rises
- After a typhoon no one buys: vendors slash prices to clear → stock price falls
Key formula:
Price change = (Today’s closing price – Yesterday’s closing price) ÷ Yesterday’s closing price × 100%
Example: TSMC closed at 780 yesterday, rises to 800 today → +2.56%
Beginner trap: Don’t get carried away by a “10% surge in one day”! Taiwan stocks have daily price limits, but U.S. stocks can drop 50% in one day. Learn the rules before entering.
4 Key Factors That Determine Stock Prices
- Macroeconomy
- GDP growth, central bank rate hikes → financial stocks may fall.
- Example: Fed signals rate hikes, Taiwan stocks drop 200 points.
- Industry trends
- EVs and AI become mainstream → related supply chain stocks soar.
- Example: NVIDIA (NVDA) tripled in a year with AI chips.
- Company fundamentals
- Revenue, EPS are key.
- Example: Hon Hai’s margin improves, stock price rises.
- Market sentiment
- Retail chasing, media hype → stocks often crash after spikes.
- Example: Metaverse concept stocks hyped online, halved in 6 months.
Technical Analysis: Reading Candlestick Charts
Technique 1: Hidden Bull-Bear Codes in Candlesticks
- Red candlestick: Close > Open → bulls win
- Black candlestick: Close < Open → bears win
- Doji: stalemate, potential reversal sign
Mnemonic:
“Morning star brings light, evening star signals flight”
Meaning: three-day candlestick patterns indicate trend reversals
Technique 2: 3 Major Indicators
- MA:
- 5-day crosses above 20-day → “Golden Cross,” buy signal
- 5-day drops below 60-day → “Death Cross,” sell fast
- MACD:
- DIF crosses above DEA → bulls incoming
- Histogram turns green to red → rally has legs
- RSI:
- >70: market overheated, risk of pullback
- <30: oversold, rebound likely
Tool tip: Use Ultima Markets’ “one-click add indicators” feature to draw automatically with ease!
Fundamental Analysis
3 Key Indicators:
- EPS: higher EPS means stronger profitability.
- TSMC EPS 40 vs. a diner EPS 2 → clear winner.
- P/E ratio:too high may mean bubble, too low a bargain.
- Taiwan average ~15x, above 30 = “rich guy,” but risk of bubble.
- Free cash flow: strong cash flow means resilience.
- More cash on hand → better defense in downturns.
Industry Winds:
- Policy tailwinds: gov’t pushes green energy → wind power stocks gain.
- Business cycle: semiconductor shortage → equipment makers profit.
Quick Recap: 3 Steps to Build Your Money-Making System
- Hybrid analysis: Technical (40%) + Fundamentals (40%) + Sentiment (20%).
- Tool boost: Use Ultima Markets for free real-time quotes & AI signals.
- Practice: open a demo account, test risk-free.
Act now:
Click to register, unlock features like “auto stop-loss” and “economic calendar,” and make investing as natural as breathing!
Disclaimer: Investing involves risks. This article is for educational purposes only and not investment advice.
