The Best At Stock Picking

Written by admin on August 26th, 2011

If you are investing then you are likely to be using one of three main ways of stock picking. These methods include fundamental analysis, technical analysis and ‘techno-fundamental’ which is a combination of the two.

So what is fundamental analysis? Well if you are new to investing then it is likely to be the type of analysis that you have already heard of. Most people use this technique for their stock picking. You make your investment choice based upon information regarding the value of the share.

You have a lot of different calulations that you can use if you want to try and value a company. You will have heard of the classic measures such as revenue and profit. There are lots of other indicators that you can use too. These will be broken down to be calculated per share so that you can measure like with like. When you are stock picking you need to think about the value compared to the current price.

You can go into a lot more detail when it comes to fundamental analysis and if you are a beginner then I sugest that you start there. Technical analysis is completely different. It doesn’t matter what the fundamentals are, what matters is how the market reacts to them. You do this be reading charts and looking at indicators such as the volume of trades.

Not everyone agrees that technical analysis is a good way of stock picking. It is quite an advanced technique as you assume that all the information is already priced into a stock’s current price. If this is true then you should be able to read a stock just from the chart and using some other indicators.

If you don’t know which type of analysis that you should be using then I would recommend ‘techno-fundamental’ i.e. working with the two methods. You have the chance to buy great stocks but you do it at a time when the market is working in your favour.

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