Any event that occurs at a regular interval of time is called a cycle. This cycle also occurs in the market with the rise and fall of the market stocks. Understanding these cycles is very important for any investor.
Phases of a market cycle
The market stocks may rise and fall at any point in time. However, they can be analyzed accurately only by using many logistic mathematical formulas. This process can also be done by cycle analysis. This process is important, just like charting your menstrual cycle. Cycle analysis consists of phases such as the accumulation phase, markup phase, distribution, and downtrend phase. These phases help in the proper understanding of the market.
The difference in the trends
The stock market cycles are not the same for everyone, but they vary depending upon the individual trends that a person is interested in. The market cycle does not have any specific range but can be looked upon at varying ranges. For example, a person who does trading might look at the stock market from a view of five or seven years. But a person who owns a high profitable corporate company might look and analyze the market cycle with a range of ten or twenty years from now.
The battle between upswing and downswing
The market for even highly profitable companies is not the same during upswing or downswing. A high-level company might get a profitable return when the market is bullish at the upswing. This is the period where people are comfortable with their money. But at a bearish or downswing in the market, people might not afford high-level products. Thus, cycles are difficult to trust blindly, but they help in assessing the market.