Typically, you buy stocks when the stock prices are fairly low, but they're showing some upward movement. If stock prices are high, but stagnant, you may want to think about selling your stocks. To be successful on the stock market, you need to know whether stock prices are moving up or down. How else will you know what to do with your stocks?

One of the best ways to determine the direction of stock prices is by analyzing moving averages, which is simply an average of the closing stock prices over a given period in time. This may seem complicated, but you don't have to analyze the stock prices yourself. There are a number of stock charting software out there that will do the analysis of the stock prices for you and display the results in a neat little chart. All you need to do is look at the line to tell the direction that the stock prices are moving. It's very simple. If the line is going upwards then the stock prices are on the increase. Conversely, if the line is moving downwards then the stock prices are decreasing.

You can state the timeframe that most interests you when you're analyzing the stock prices. If you really want to be successful though, you'll look at not only short-term patterns in stock prices, but also long-term patterns. If you stick to only short-term analysis, you may miss patterns in the stock prices that can make you money. For example, if you short-term analysis shows that stock prices are going down in a particular week, you may be tempted to cut your losses and sell your stock. But what if that's a pattern in the stock prices? What is there's usually a slight dip in the stock prices before it actually goes up again and doubles in value? If you didn't do a long-term analysis of the stock prices, you would have lost out.

Here's a simple rule of thumb when it comes to stock prices. If both the short-term and long-term averages are on the rise, and the short-term average is higher than the long-term average, you've got a winner. This is a very strong trend in the stock prices and chances are it will continue. If the opposite is occurring and your stock prices are going down in both cases, don't buy. In fact, consider selling since chances are the stock prices won't be going back up anytime soon.