There are two main types of Stock Market Analysis:
- Fundamental Analysis and
- Technical Analysis
So what do these terms mean?
They are terms used to describe different ways of reading the market so you are able to determine the probable movements of stocks.
Fundamental Analysis involves examining companies in order to attempt to forecast their future stock price movements. This form of analysis researches balance sheets, income statements and a companies economic situation, you are then able to use the information you gather for making a decision on whether to buy shares in a company. If all of these areas are strong you would buy stocks in the belief the value of the company will grow.
Technical Analysis involves the study of a companies price performance history, in the market, using charts in order to determine its future performance. Share prices are often driven by the fear, greed and indecision of investors, technical analysis of the charts attempts to interpret the probable future direction of a stock based on that knowledge and the use of past performance indicators in the charts.
If you really want to have an understanding of the market and a means to analyse what drives the bull (up) and bear (down) cycles both technical and fundamental analysis can work for you.
Don’t however overlook the role of the human factor fear and greed, human emotions will always be a driving force in the market with a degree of predictability about them.
In saying that be also aware of your own emotions, have a method in place, when trading, that you follow so you are not overcome by emotional reactions.
Education is an important part of your wealth creation strategy be sure to invest in yourself as well.
Power Thought
Repeat this to yourself
Tags: share, stock market, trading
