Four Phases of Market

Important Phases of Market 

Hello Everyone...!!

This Blog is going to be a very important one.

Generally, Stock market is a cycle of 4 periods. We can compare this to the seasons of the nature like Summer then Rainy season and after that the Winter season. 

Exactly in the same way there is an Accumulation, Rally, Distribution and finally Decline in the stock market. Let's understand this on the following figure:

Phase 1 : Accumulation

Major moves on the upside starts with the process of accumulation. This phase is powered by a Big player i.e. Big investors who realize that the market has good scope to rise further in the near future. So they starts building their positions and wait for the up move.

Phase 2 : Rally / Uptrend

Next is a rally phase. in this phase technical traders takes participation. The large scale participation results in the rise of prices. Media and news channels are also buzzed with the good news about the stock on market which attracts more traders to buy the stock.

Phase 3 : Distribution

After seeing the action of the rally phase, An experienced player who entered at lower price level starts exiting their trades to book profits. 

Phase 4 : Decline / Downtrend

As most of the players exiting their positions in the distribution phase, price starts drifting downwards as there is no more demand for buying. This is the last phase where marketers takes Short positions.

Please Take a Close Look at the Charts Below:

 

 

 That's it for now. Keep learning.