Candlestick Trading Blog
August 4, 2009
Buy and Sell Stocks
| How Fundamental Analysts Buy and Sell Stocks There are certain steps that new investors can take when learning to invest in the stock market. In today's article we discuss those steps that an investor would take if he or she practices fundamental analysis as opposed to technical analysis. Typically fundamental analysis practice long term investing while technical analysts practice short term investing. The first step investors must take is they must understand how stocks operate. When you buy and sell stocks you are equity investing. You actually own part of the company when you buy shares of stock and as the company does better so does the value of those shares. The next thing you must do is know the stock exchanges. Stocks are traded on three major exchanges including the New York Stock Exchange, the American Stock Exchange and the NASDAQ. Some of the largest companies in the world are traded on these exchanges. You should then familiarize yourself with the different types of stocks that you can buy. These include growth stocks, income stocks, value stocks, cyclical stocks, and international stocks. You will also need to look at companies whose products you know and that you are familiar with as you buy and sell stocks. After deciding which types of stocks you should invest in, you then must clarify you investment goals. Are you beginning to invest for retirement or are you looking to produce income. You will also determine the investment risk and your risk tolerance as you determine investment goals. As you buy and sell stocks you must determine how these stocks fit in with you entire investment portfolio. Construct asset allocation for your entire portfolio and decide how much should go to stocks. You may need to adjust your stock portfolio as stocks gain and lose value in order to maintain portfolio diversification. The next step is to understand the fundamentals of those companies whose stock you are buying. This includes information such as the market they are in, their balance sheet, and their competitors. You will also need to look at the company's past and present earnings per share. You should also calculate the company's price to earnings ratio. This ratio divides the price per share of the stock by its earnings per share. You will also need to find a brokerage firm that you are comfortable with and that you can afford. You will need to determine the type of broker you will use and this will depend upon the level of services that you need. There is a lot more to buying and selling stocks, but this article should get you headed in the right direction. Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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