Stock Market Behavior Analysis

Many traders and investors never fully understand how the stock market works. To the novice, the stock market appears to be logical, straightforward, and fair. After all, that’s what everyone tells you, and what is taught at most financial institutions.

The stock market is a lot more complex than many realize. On some trading days, the market moves in unpredictable and unexpected directions, and on other days it meanders aimlessly. The changes in the price of stocks and indexes are often fueled by computer programs (algorithms, or algos) that trade large stock volume. Other contributors to market volatility are breaking news, or comments and actions by the Federal Reserve (the Fed).

Think of the market as a complicated ...

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