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How to Analyze Stock
There are two basic things to learn in how to analyze stock. There is fundamental analysis and there is technical analysis. For long term investing it is important to understand the workings of a company, its products and its balance sheet. For day trading when the trader will buy stock and sell stock every day it is more important to use technical analysis tools such as Candlestick patterns in order to anticipate short term stock price movements and market reversal. Whereas long term investors are interested in the price to earnings ratio of a stock, traders are more concerned with the use of Candlestick trading tactics and Candlestick pattern formations. In short, how to analyze stock has to do with trading or investing.
To a degree both investor and trader need to know both ways to analyze stock. The trader will be well served by knowing which stocks may be most volatile and thus most profitable to trade. Being able to predict that a stock will rise in the near future will enable the options trader to make money buying calls and buying puts. Although the trader will use Candlestick analysis to analyze price movement the trader will only find the stock and have an idea of its prospects by knowing the company’s fundamentals. Thus the trader will be interested in the stock in part due to fundamental analysis but will execute trades or trade options based upon technical indicators.
Learning how to analyze stock will start with the fundamentals. Then it builds to a thorough knowledge of technical trading. Investors especially need to learn how to identify factors used in value investing. Learning how to identify a margin of safety in a stock can lead to long term gains. Looking for a low price to sales ratio can be helpful in identifying potentially profitable stock picks. When an investor or trader understands how to analyze stock fundamentals it is time to move on to the technical aspects of analysis.
Technical analysis in a more formal form has been around for around three hundred years. It came out of commodity trading for rice in ancient Japan. The fact is that markets run in patterns and the patterns repeat themselves. Certain patterns indicate that the market price of an equity or derivative will go up next and certain patterns indicate that the price will fall. Candlestick basics allow the trader to see a visual representation of market movement. The trader will enter price data into a chart, or have the computer do the work. Then the trader will do Candlestick chart analysis looking for indications of new market trends or price reversals.
2. There are two basic things to learn
in how to analyze stock. There is
fundamental analysis and there is
technical analysis. For long term
investing it is important to
understand the workings of a
company, its products and its
balance sheet.
By: www.CandleStickForums.com
3. For day trading when the trader
will buy stock and sell stock every
day it is more important to use
technical analysis tools such as
Candlestick patterns in order to
anticipate short term stock price
movements and market reversal.
By: www.CandleStickForums.com
4. Whereas long term investors are
interested in the price to earnings
ratio of a stock, traders are more
concerned with the use of
Candlestick trading tactics and
Candlestick pattern formations. In
short, how to analyze stock has to
do with trading or investing.
By: www.CandleStickForums.com
5. To a degree both investor and
trader need to know both ways to
analyze stock. The trader will be
well served by knowing which
stocks may be most volatile and
thus most profitable to trade.
By: www.CandleStickForums.com
6. Being able to predict that a stock
will rise in the near future will
enable the options trader to make
money buying calls and buying
puts.
By: www.CandleStickForums.com
7. Although the trader will use
Candlestick analysis to analyze
price movement the trader will
only find the stock and have an
idea of its prospects by knowing
the company’s fundamentals.
By: www.CandleStickForums.com
8. Thus the trader will be interested
in the stock in part due to
fundamental analysis but will
execute trades or trade options
based upon technical indicators.
By: www.CandleStickForums.com
9. Learning how to analyze stock will
start with the fundamentals. Then
it builds to a thorough knowledge
of technical trading. Investors
especially need to learn how to
identify factors used in value
investing.
By: www.CandleStickForums.com
10. Learning how to identify a margin
of safety in a stock can lead to long
term gains. Looking for a low price
to sales ratio can be helpful in
identifying potentially profitable
stock picks.
By: www.CandleStickForums.com
11. When an investor or trader
understands how to analyze stock
fundamentals it is time to move on
to the technical aspects of analysis.
By: www.CandleStickForums.com
12. Technical analysis in a more formal
form has been around for around
three hundred years. It came out of
commodity trading for rice in
ancient Japan.
By: www.CandleStickForums.com
13. The fact is that markets run in
patterns and the patterns repeat
themselves. Certain patterns
indicate that the market price of an
equity or derivative will go up next
and certain patterns indicate that
the price will fall.
By: www.CandleStickForums.com
14. Candlestick basics allow the trader
to see a visual representation of
market movement. The trader will
enter price data into a chart, or
have the computer do the work.
By: www.CandleStickForums.com
15. Then the trader will do Candlestick
chart analysis looking for
indications of new market trends
or price reversals.
By: www.CandleStickForums.com
16. Whether for long term investing or
for day trading it is important to
learn how to analyze stock. Stock
market investing is a business and
success in investing in the stock
market comes from knowledge,
skill, and hard work.
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17. Learning how to analyze stock
gives the investor or trader the
advantage over those less willing to
spend the effort and time in the
business of making money in the
stock market.
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