How to know when a stock is about to take off

Making an investment in stock shares can be very lucrative. Getting positive returns in stock trading however depends on keeping a close eye on the trends in the market. When you know what to look for, you can avoid making loses by buying stock that will not give high returns, and also by knowing what the right selling point is.

There are several indications that can alert you when a stock is about to take off, and we’ll look at some of them.


Keep an Eye on the Money Flows

Money flowing either in or out of a stock impacts share prices directly. When there has been a steady money flow into the shares, usually the price of the stock will increase. The opposite results in low prices. There are several readily available technical analysis indicators where you can watch money flows. When you notice an upswing in the money flows, get ready for higher prices.

Keep Up With Professional Investors

Most often than not, we have expert investors purchasing a portion of shares from companies of interest to them. They are able to predict the future of share prices by using high-level analysis, and also as a result of the greater and more intimate knowledge that they have about the company. Mutual fund and hedge fund managers are a great group of investors to watch. This is because they build their reputation on the predictions they make. They will therefore put more effort and closer analysis in ensuring that their predictions about the stock are accurate.

The Higher the Highs, the Lower the Lows

When a stock is about to take off, it will have both up and down days. By focusing on these ups and downs for a certain time period, you can spot stocks whose prices are about to get high. Studying the stock for a time will give you a more accurate picture of where it’s headed to, as a sudden upward trend may not necessarily mean the prices are going to remain high.


Increased Trading Volume

When a company goes through a positive event or shares some good news, their shares’ trade volume usually rises. This is because investors rush to buy them when the company’s outlook is looking good, and this high will not decrease until many days later. If you find that the daily trading capacity has doubled what is usually the average volume, with the stock price moving higher and higher, it’s a great time to invest. Note that increased trade volume may also come with lowering prices. Beware of this, as it means shareholders are selling their shares as a result of something negative behind the scenes.

The Company has Been Constantly in the News

When a company name or product keeps coming up everywhere, it might be a catalyst for share price spikes. This is usually when the hype is coming from a variety of sources, and over the same period of time. You can expect share prices to sharply rise in the short term.