This is my personal trading log.
I’m a rookie trader and in no way a professional. I am just learning myself, but I consider myself to be slightly more knowledgeable than the average trader. I personally use technical analysis to analyze the stock market and have met with some success while paper trading. This blog is just to solidify the knowledge I already have and to help anyone that may not know anything about market analysis.
Fundamental analysis means finding out everything I can about the instrument I’d like to trade. The other side of stock analysis is fundamental analysis. Fundamental analysis takes a look at a company’s financial data and historical performance. This is to give traders an idea of how successful a company may be in the future based on how the company is doing now and how they did previously. If it’s a share, for example, what shape is the company in? What does their latest company report say? What sector does it operate in and how are other companies in that sector performing? What is happening to the market in general? EPS (earning per share)? Book Value? Quick Ratio? Current Ratio? Debt/Eq ? LT Debt/Eq ? E/P ? What in the news could be affecting the company or the wider share market in general?
Technical analysis involves studying the performance of a particular instrument over time by using charts. Study technical analysis long and hard enough and you can spot the best moments to buy and sell. Except moving averages, indicators are not useful. Technical analysis is not difficult, but there is a lot of information that must be put together to get a complete picture of a individual stock or index. Technical analysis simply allows a trader to analyze past data and price points to attempt predicate the future direction of a stock. The idea is that people are predictable which makes the stock market move in predictable ways. Technical analysis finds patterns that stocks make and when a pattern appears then there is a change that the stock will move a certain way based of how it responded to the pattern in the past. There are several “tools” that help to simplify the analysis process such as Moving Averages, Stochastics, Bollinger Bands, and Fibonacci’s.
Fundamental analysis is complicated, many variables to consider. Technical analysis is simple.
Remember: study hard and be patient. Don’t expect to be making big profits within weeks.