by Alexandra Grose

Created on: February 25, 2009

It's really quite simple to predict the daily stock market activity. First you need to practice and then, to understand that all predictions aren't necessarily right. So be prepared to get it wrong occasionally. Don't place all your money on the one trade and only trade for the next day, or the next few days.

Some other things to know, when predicting prices, are: Bollinger Bands (BB) and Volume, plus the fact that you can make money in a falling market, as well as a rising market. If the market is rising and you buy shares to go up, this is called going long. If you buy for the share price to fall, this is called going short.

Trading companies, with Internet access, will have BB and volume, as part of their standard charting tools. For those of us who've spent many years studying charts, you can set the parameters of the BB to suit yourself. This gives you more accurate data. Otherwise, the standard settings from the company you're trading through, will be quite adequate.

When the BB hits the lower band and you buy to go up (go long), you make money, once you've sold at a higher price. When the BB hits the top band, you buy to go down (shorting) and you make money on the difference. With shorting the market, you borrow the shares (at a cost) from the company, sell them at today's price and buy them back, once the price has dropped, returning the shares to the company and keeping the difference on the price, as your profit.

Bollinger bands are lines, or bands, plotted around a structure. In this case a share price movement, within a chart. They measure the highness and lowness of the daily price movements within them. Prices either bounce off the BB once hit, or track the bands, continuing in the same direction. The skill is in knowing which one is going to happen.

Volume will give you a clue as to whether the price will bounce or continue to track. If, for example, the price has dropped and is approaching the lower BB and the volume is increasing, there's a good chance that the price will hit the lower BB and bounce off. If there's low volume, there's a good chance that the price will continue in the same direction, tracking the BB to a new low. If there's extraordinary volume, this could mean something entirely different, like some unforseen event, or news and it would probably be best to stay out of the market that day.

If the share price jumps outside the Bollinger bands, either to a new high, or a new low, there's a good chance that within the next day or two,

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