August 8, 2007
Stock Research
It seems like an innocent statement, “in order to make more profits, you need to research stocks better.” Everyone knows the more you understand about a company before you invest, the better you will do in the stock market, right? It may sound silly, but for many people, not enough attention is paid to technical analysis, which might explain why so many people lose money in their investing. Successful investing is the combination of many things and stock research is a huge part of the equation. We know stock research is a huge part of investing, but what exactly makes up stock research?
Breaking Own Stock Research
To research stocks successfully, you need to focus on five things that are stock price factors: fundamentals, price history, price target, catalysts and comparisons. Each of these factors is an important component of understanding the stability of a company and the value of its stock. These components are as follows:- Fundamentals – This is the financial nuts and bolts of the company. What is its core business? Is the company financially sound? Is the company growing? These are the types of questions that make technical analysis sites so popular; if you are really interested in taking your investing to “the next level”, you will research the stocks on each and every trade that you consider. This isn’t an optional idea; in order to understand the strength of a company, you simply must invest time to know its corporate and financial stability before determining your investment strategy.
- Price History – You need to know what other investors have been willing to pay for a particular stock in order to evaluate its potential. If you research a stock’s price history and it has reached its all-time high, it’s very possible that it won’t sustain its movement past that point. Stocks have resistance points and you may find you’re making an investing mistake if your stock research doesn’t include this important information.
- Price Target – A good technical analysis tool will help you to not only determine what the price of a stock has done but what it is likely to do in the future. Such stock research can be derived from a tool like Japanese Candlesticks which helps investors to see future trends with its Candlestick signals. By using these signals along with their stock research, investors can better identify what prices will do in the future.
- Catalysts – These are the things that will change a buyer’s perception of a stock and create interest in purchasing shares. Favorable Wall Street news, acquisition announcements and other business moves can generate this interest. Stock research for catalysts usually comes from investment publications or the evening news.
- Comparisons – Those who research stocks place a strong emphasis on the industry where a stock is found, also known as its stock sector. How a stock fares within its particular sector is crucial to determining how it is performing. A stock that isn’t one of the leaders in its sector will have a difficult time being a successful mover in the market.
Conclusion - What To Do With Stock Research
Isolated, this is simply raw data, but when analyzed together, these five components become a powerful tool for helping a successful trader make investment decisions. Researching stocks allows then investor to identify potential companies to buy or existing holding to liquidate. Many people choose to use stock screeners, computer programs which filter stocks based on certain criteria. No matter whether you are using screeners, corporate annual reports or the evening news, stock research is the key to improving your trading.
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Stock Market Reviews presented live via the internet by
Stephen Bigalow |
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