Key Indicators
Experienced investors and stock-brokers use a range of key indicators to help them decide when to buy and sell their shares. Some investors rely on gut instinct whilst others use a complicated system of checks and balances. The most common method for tracking investments is by using standard performance indicators, such as the 52 week range of the company in question or the net change the shares have made over the last two full trading days. Understanding the importance of these indicators allows investors to make an educated decision about whether to buy or sell.
Current value
News-based television channels, stock-exchange websites and financial newspapers such as the Financial Times publish a range of stock performance indicators on a daily (or in the case of broadcast media, even more frequent) basis. Common data that is tabulated includes the closing price of the particular share, which is the last price that the stock was bought and sold at. This is a good indicator of present perceived value and is important for both buyers and sellers.
Share Trend
The fifty-two week range of the stock's buying and selling price is another interesting indicator, as it shows the highest and lowest price the stock in question has been bought and sold for over the past year. Such information shows whether the stock has decreased or increased in value over a longer period of time. The trend in a share price can be a more accurate indicator of value than the present price, which is only a snapshot.
'High And Low' Indicator
In a similar vein, the 'high and low' indicator shows the stock's highest and lowest price from the last day of trading; a vital piece of information particularly in the instance of companies which are undergoing rapid growth or change. The net change indicator is also useful, showing the difference in closing prices between the last two full trading days.
Trading Volume
Like the 'high and low' indicator, the net change can be used to determine whether a particular stock is undergoing huge price fluctuations. The final common performance indicator published is the volume, that is, the number of shares for a particular company that were traded over the last full trading day. Volume can be an indication of large buy-ups or sell-offs.
Share Indices
Aside from these performance indicators, which are good for analysing the progress of individual companies or stocks, it is also wise to keep a close watch on the indices. Shares indices track major trends and use point-based systems to show whether the markets are experiencing an overall growth or decline. By comparing indices to individual stocks you can quickly establish whether your individual stocks' performance is a symptom of a wider market trend or whether it is in fact moving against the flow.
Within the United Kingdom the Financial Times Stock Exchange Index 100 (commonly abbreviated to FTSE100) is the main index used; in Europe the FTSE-Eurotrack is the major marker (aside from each country’s individual bourse). The United States relies upon the S&P 500 Index, the Dow Jones Industrial Average and the NASDAQ, whilst in Japan the Nikkei 225 is paramount.