Stock Picking methods may include fundamental or technical analysis. They will take their time and perform stock analysis before they make their decision to buy. Before you begin trading stocks in the stock market today, you really need to know what you are doing, otherwise you will end up losing money. It may look easy enough buying stocks and selling them at a profit, but there is a lot more to it than meets the eye. To make sure that you are not putting your money into a company that will go bankrupt, or see its share value decline due to poor revenues, it is crucial that you research a company carefully.
Stock analysis can be done through looking at stock charts and chart analysis. This method is mainly used by technical analysts who will look at past data on a stock pick and see how its price and volumes moved. There are various schools of technical analysis like candlestick charting, Dow Theory or the Elliot wave theory. Many analysts will combine the different methods, while others may strictly adhere to just one. The reason past pricing information is so important is because price action tends to repeat itself as a result of the investor’s collective tendency to follow patterned behavior.
Stock analysis can also be done through using fundamental analysis. This is where a company is analyzed on different fronts from management, financial statements and balance sheets, to the industry sector. Investors will look at who the management are and what abilities they have to steer the company to success. They will delve into the backgrounds of top management to insure that they are all competent individuals. It is important that they have experience in the field that the company is in, and that they are in the position they hold through honest means.
The income statements of the company will be reviewed to see how much money it made and how much it spent. Analysts look at the profit that the company makes, and if it is paying dividends to its shareholder. They will take into consideration the company’s assets and liabilities. This is an area that investors are attracted to because they like companies that have liquidity after they have paid off debts. Stock analysis is used frequently by most investors and should be considered an essential part of your research before buying shares in any company.