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All about market cycles by Indian stock market advisor sharetipsinfo

If you wish to make maximize returns on your investments or trading returns, then it is very important that you understand the concept of market cycles. Without knowing the cycles of market, you would not be able to maximize your return. So let us understand the different types of cycles and find out how you can recognize them. But you should always keep in mind that you need to learn about NSE, BSE…etc so that you get full knowledge of the functioning of the market.

 

Accumulation Phase

 

This phase occurs when experienced traders begin to buy or invest in the stock market figuring that the worst is over after the market has bottomed. Here the seller can expect to pick the stocks at a healthy discount. Overall market sentiment starts to switch from negative to neutral stage. This is known as accumulation phase in the market.

 

Mark-Up Phase

 

Here in this phase, the Indian stock market becomes stable for a while and it begins to move higher. This group may include technicians who see that the market is putting in higher highs and higher lows and they estimate that the direction and sentiments of the market have changed. But here unemployment continues to rise and there would be media stories that the possibility of the worse is over. The market volumes begin to increase substantially when this phase comes to an end. In mark-up phase sentiment of the market moves from neutral to bullish.

 

Distribution Phase

 

This is the third phase of the cycle where sellers begin to dominate. In the previous phase we saw that the sentiment of the market moved from neutral to bullish. So, in distribution phase, the previous phase turns into a mixed sentiment. This phase can come as well as go very quickly. In this phase, you can see classic patterns like double and triple tops. What’s more, you can also expect head and shoulders top patterns during the distribution phase.

 

The distribution phase is considered to be a very emotional period for the markets. This is because investors always gripped by complete fear and they might become greedy as well. Sentiments changes but slowly. So, you have come to understand the different market cycles.