We all know the market goes up and the market goes down. Thousands of people will give you advice on what their favorite stock is. But there are no magic answers as to which stock picks will make you money, and which won't. When you are looking at investing in stocks here are three theoretical terms that might give you something to think about.

DEAD CAT BOUNCE: This is the effect seen when a stock price rises after a sustained period of downward movement. Often people start to buy again thinking the turn around has happened and then the stock drops even further.

What does it mean for me? Because no one can predict when a decline will reverse don't rush in. But it may provide you a window to make trading gains while the stock is in this pattern.

THE BELLWETHER STOCK: This is a market indicating stock, one that predicts the direction of the market.

Why is this important to me in stock trading? These stocks usually have a large percentage ownership by institutional investors - the big boys on the scene. While these stocks may signal the direction of the market they may not be the most attractive investment choice for those wishing to make gains. They are useful to watch however to get a feel of what might happen next.

THE JANUARY EFFECT: This is the effect that sees the beginning of a new year heralding higher stock prices in January. It has been attributed to tax factors and to investor sentiment. People often unconsciously expect prices to rise in a new year.

Why is this important to me? While research shows the effect to be real, it is hard to turn these gains into profits in stock trading. The chances have become less and less. However it is important to be aware of this phenomenon so that if an opportunity presents itself, you may be lucky to be able to take advantage of it.